India’s leading hospitality startup OYO is expected to raise around $500 million to $1 billion in its next funding round, and to enter the coveted Unicorn club with a valuation of over $4 billion, according to the people familiar with the development.
“Oyo has got multiple term-sheets and is expected to finalise the deal by the end of this month. Venture capital investors Sequoia Capital and Lightspeed are also participating in the round in a meaningful way.”, said one of the sources.
This news comes at a time when OYO has been accelerating its expansion overseas and venturing into new industries. OYO recently acquired wedding planning startup Weddingz, in order to strengthen its wedding vertical, after it launched its new venture “Auto Party” to enter the wedding industry last month.
Gurugram-based OYO had last raised ₹1,600 crores ($250 million) in series D funding round in September 2017, led by Softbank, along with participation from Lightspeed Venture Partners, Sequoia Capital, Greenoaks Capital, and Hero Enterprise. This funding round had valued the startup at $850 million.
Currently, Softbank is the leading shareholder in the hospitality startup with around 45% share, while Lightspeed Venture holds 15%, Sequoia Capital holds 11%, and Ritesh Agarwal, founder and CEO of OYO, holds around 11-12% share.
In India, OYO claims to be approaching profitability, the startup has around 100,000 rooms under management across 230 cities. According to industry sources, the commission charged by the startup from hotels has doubled from earlier 10-11% to more than 20%. This has also helped the startup move towards profitability.
If the new funding comes about, OYO will be looking to strengthen its presence in China, as it looks to foray into other Asian markets. In an earlier statement, OYO had claimed to have 50,000 rooms across 50 cities in China.