According to a regulatory filing, Microsoft has made $5 million in Oyo, an Indian budget hotel chain. This investment confirms a TechCrunch scoop last month.
Oyo's new investment values it at $9.6 Billion, which is just slightly less than the implied value of Indian startups' previous financing round in 2019. SoftBank, the largest investor in Oyo, valued the startup at $3 billion, despite it losing significant business due to the pandemic.
TechCrunch reported that Oyo could also be shifting to Microsoft's cloud services as part of this strategic investment. According to two sources familiar with the matter, Oyo is expected to file for an IPO in the next year.
Oyo is India's most valued startup and has expanded rapidly to other markets, including Europe, Southeast Asia, and the U.S. over recent years. However, Oyo's missteps in toxic culture and lapses in governance as well as its relationship with many hotel owners have hampered its growth.
The pandemic struck just as Oyo was promising to improve its relationships with hotel owners. Oyo responded by slowing its growth and laying off thousands of workers globally as countries around the globe imposed lockdowns.
Agarwal said that the pandemic struck the startup, which was seven years old, like a cyclone. It took us so long to build something, and it only took 30 days for it to drop by more than 60%. He added that the firm hadn't made any decision about exploring the public markets.
Oyo, which was backed by Airbnb, had $780 million to $800 millions in its bank. Agarwal stated this at a recent virtual conference. He also said that Oyo had reduced its monthly spend across all businesses to $4M to $5M. The startup had approximately $1 billion in bank assets as of December 2020.
Oyo announced that it had taken $660 million in debt last month, following Agarwal's remarks at the conference. According to someone familiar with the matter, the debt was used for the repayment of the existing debt.
The deal between the two companies will be Microsoft's latest investment in an Indian startup. A handful of South Asian startups have been supported by the firm, including DailyHunt (news aggregator and short-video platform), Flipkart (e-commerce giant), and FarEye, a logistics SaaS company.
