India’s Oyo, once valued at $10B, finalizes new funding at $2.5B valuation

Oyo, the Indian budget-hotel chain startup, is in the final stages of securing a new funding round of approximately $100 million to $125 million, which will lower its valuation to $2.5 billion, according to sources familiar with the matter as reported by DailyTech.

This marks a significant decrease in the valuation of the Gurgaon-based startup, which was valued at $10 billion in 2019. Facing challenges in raising funds from institutional investors, Oyo has been actively approaching high-net-worth individuals in recent months.

“We believe that this asset presents a compelling opportunity at present, being profitable and offered at a 70% discount to its previous valuation. We anticipate a listing within 18-24 months,” a representative from InCred, a financial firm collaborating with Oyo, mentioned in a message seen by DailyTech.

Earlier reports from DailyTech suggested that Oyo was looking to raise funds at a valuation of $3 billion or less. Despite Oyo’s denial of such rumors at the time, the sources indicated that the new funding round is expected to be larger in scale.

Following the abandonment of its IPO plans last month, Oyo, backed by investors like SoftBank, Peak XV Ventures, Lightspeed, Airbnb, and Microsoft, withdrew its IPO application from the Securities and Exchange Board of India (SEBI) for the second time in four years.

Oyo had initially filed for an IPO with SEBI in 2021 but later withdrew and resubmitted in 2023. With over $3 billion raised to date, Oyo aimed to raise $1.2 billion at a $12 billion valuation in its 2021 IPO.

Once a prominent player in the Indian startup scene, Oyo provides a platform for hoteliers to manage digital bookings and payments. While it previously operated in numerous markets worldwide, including the U.S. and Europe, Oyo has since scaled back its international presence.

Founder and CEO Ritesh Agarwal reported a net profit of $12 million for the financial year ending in March. In 2019, Agarwal took on a $2 billion debt to increase his stake in Oyo, valued at $10 billion at the time.

The Economic Times also covered the news of the upcoming funding round, mentioning that Oyo will seek approval from existing shareholders for the funding this week.