NEW DELHI — SoftBank Group Corp. is doubling down on one of its biggest bets in India by leading a $1 billion investment in hotel-booking startup OYO Hotels.
The company, based in Gurgaon, India, has received $800 million in a round led by Soft- Bank's Vision Fund, which SoftBank Chief Executive Masayoshi Son is using to back cutting-edge technologies, OYO said Tuesday. U.S. venture-capital firms Sequoia Capital and Lightspeed Venture Partners also contributed to the round, and existing investors have pledged a further $200 million.
“We plan to rapidly scale our business,” with a focus on continuing OYO's expansion into China, 24-year-old company founder Ritesh Agarwal said in a statement. OYO also operates in Malaysia, Nepal and the U.K.
The new round of funding values the company at $5 billion, including the new funds, according to a person familiar with the matter. That is up from a post-money valuation of roughly $850 million when OYO received $250 million last year in a round led by Soft- Bank.
Launched in 2013, OYO has used technology and standardization to help match scores of independent small hotels with new customers. It began by connecting India's thousands of budget hotels, which typically lacked websites, to its booking platform. OYO now also offers stays in private homes and has created its own brand of hotels designed to appeal to millennial travelers.
The company isn't profitable, a spokeswoman for OYO said. OYO operates in 350 cities across five countries, with more than 125,000 rooms in India and over 87,000 rooms in China, where it began operations in June. It said it would dedicate about 60% of the new funds to building out its business in China, where it is “still in the early stages” of growth.
“OYO's unique value proposition and outstanding growth over the last few years gives us the confidence that OYO can scale,” said Justin Wilson, director at SoftBank Investment Advisers, which manages SoftBank's nearly $100 billion Vision Fund.
International investors and technology companies have been rushing to get a piece of India, a largely untapped internet economy, where hundreds of millions of people are getting online for the first time thanks to falling prices for mobile data and smartphones.
Walmart Inc. in May spent $16 billion to take over India's biggest e-commerce startup, Flipkart Group, while Amazon. com Inc. is spending $5 billion to ramp up operations in the South Asian nation.
BY NEWLEY PURNELL