OYO bags a $7.4 million cheque as pandemic forces Ritesh Agarwal to reimagine the business

• Ritesh Agarwal-led OYO has raised ₹54 crore or $7.4 million from Hindustan Media Ventures in a series F round of funding.
• During the COVID-19 pandemic, Agarwal had said that the company continues to have $1 billion in the bank to continue operations.
• However, the valuation of the startup has also reportedly crashed from $10 billion to $8 billion.

Ritesh Agarwal-led OYO has raised ₹54 crore or $7.4 million from Hindustan Media Ventures in a series F round of funding, said reports citing regulatory filings. The hospitality unicorn, which has been severely hit by the coronavirus pandemic, is back in the funding circle.

OYO declined to comment on the funding reports.

However, Agarwal revealed to Business Insider in an interview in October 2020 that he is now spending most of his time with the product, data science, and engineering teams. They are using data to capitalise on segments that have survived the crisis, like upmarket vacation homes. “We are seeing growth in weekend travel, and we are seeing essential travel increase, so we are doubling down there,” he said.


OYO’s funding history

OYO had last raised funding of $2 billion in October 2019, when Agarwal had pumped in money into his own startup raising his own stake to over 30%. During the COVID-19 pandemic, Agarwal had said that the company continues to have $1 billion in the bank to continue operations.

Here’s a look at the funding details of OYO
Source: Tracxn

However, the valuation of the startup has also crashed from $10 billion to $8 billion. According to a Hurun report released in August, 2020, the fall in valuation has been marked in line with the AirBnB valuation markdown to factor the COVID-19 impact on the hospitality business.

“We took into account the post COVID scenario and we have adjusted the valuation of some of the businesses. Hospitality, it’s a no brainer, is one of the highly impacted sectors. AirBnB has downgraded the valuation by 25% and we have taken a conservative in-line approach of reducing the valuation in terms of the nearest comparable data,” Hurun Report India MD and Chief Researcher Anas Rahman Junaid had told Business Insider then.

Meanwhile, the crash in valuation also seems to have depleted Agarwal’s personal wealth. According to the Hurun Rich List of 2020, Agarwal’s wealth depleted by ₹3,000 crore. However, Agarwal continues to be one of India’s youngest billionaires with a net worth of $1.1 billion.

OYO’s push for recovery

In 2020 beginning, just when OYO rose from an internal crisis to an inspired push towards profitability, the pandemic brought travel and tourism to a grinding halt. Its revenue dropped severely, the company furloughed several employees and also slashed salaries to cut costs. However, by the end of 2020, the company claimed to have reinstated salaries for most employees who escaped the axe.

Towards the end of the year, OYO began to see green shoots of recovery as travel slowly returned especially in China, which is one of the biggest markets for the hospitality unicorn. OYO also turned its efforts towards becoming a quarantine centre during the pandemic and partnered with over 24 state ministries and 50 government and private hospitals.

OYO has been pinning its hopes on the staycation and ‘drive-to’ destination trend to get back on track. In fact, OYO has been betting on its holiday homes vertical in Europe, and recently Agarwal had mentioned that having already pumped 350 to 400 million Euros in the area, they are looking to invest more.