Hero Enterprise joins the list of existing investors to Indian hospitality startup OYO

Indian hospitality startup OYO announced a INR1,600 crore (US$250 million) Series D funding round led by SoftBank through SoftBank Vision Fund.

Existing investors Sequoia India, Lightspeed Venture Partners, and Greenoaks Capital also participated in the current round.

The company also named Hero Enterprise as a new investor.

“We are now focussing on further accelerating network coverage to consolidate our leadership in economy through OYO Rooms and mid-market category through Townhouse brands. We will also deploy fresh capital to take our made-in-India business model to international markets which are characterised by a similar supply-demand imbalance in real-estate and hospitality,” OYO Founder and CEO Ritesh Agarwal explained.

According to a press statement, OYO is looking towards Southeast Asia as its international expansion destination, though the company has launched its entry to Malaysia in January 2016.

It will also use the funding to enhance customer experience and technological development.

Also Read: RedDoorz raises US$1M to deliver quality budget hotel experiences in SE Asia

The funding report first surfaced in April. According to the report by The Economic Times, SoftBank initially looked to infuse US$500 million into this round. But OYO’s early investors opposed the move, because this would give SoftBank over 50 per cent ownership in the firm, and that they will have to dilute their shareholding.

Prior to this funding round, OYO raised US$100 million funding round from from SoftBank and an undisclosed international sovereign fund, with participation from existing investors Sequoia Capital, Lightspeed Venture Partners, Greenoaks Capital, DSG Consumer Partners and Venture Nursery.

It is dubbed as one of the most well-funded startup in the sector, and was involved in a controversy when Sumanth Raghavendra accused them of being a Ponzi scheme in a blog post. Agarwal called the accusation as an “insult” to his company’s employees.

Launched in May 2013, OYO operates OYO Rooms which offer standardised budget hotel reservation service.

It also operates Townhouse, which the company described as “a managed hotel brand that combines experience and value for mid-market customers.”

Also Read: Budget travellers: Meet Tinggal, the hotel-booking app with a staying focus

“We are developing capabilities to add 10,000 rooms to our network each month. Over 95 per cent of OYO’s demand comes through our own channels with no commissions to pay, and the business has a solid growth outlook,” Agarwal said.

In the Southeast Asian market that it is looking to further expand in, OYO will compete with Zen Rooms, NIDA Rooms, Tinggal, and Airy Rooms, which offer a similar standardised budget hotel reservation service.

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Image Credit: OYO

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