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Ola would have profitable, had Uber been not in India: Avnish Bajaj, Founder of Matrix Partners


Ride-hailing startup Ola would have been profitable had global behemoth Uber not been in India, said Avnish Bajaj, founder of Matrix Partners India.

“You have to separate fundamentally flawed business from the competition. I believe best products ultimately win. There should be incentives for new good companies. There should not be a protectionist approach for bad model. Capital can’t last as a differentiator,” said Bajaj in an interview to Livemint.

Ola, founded by Bhavish Aggarwal and Ankit Bhati in 2010, has raised around $1.4 billion till now from marquee investors that include SoftBank, Tiger Global, Matrix Partners, Baillie Gifford and DST Global.

The cab-leasing arm of the cab aggregator has posted a loss of Rs 13.3 crore for FY16 compared to a profit of Rs 3.9 crore the previous year, according to the RoC.

Talking about Ola rival Uber being in controversy and receiving backing form SoftBank, he emphasized the company should keep their culture and behaviour in check.  “Uber has never had dearth of capital. So whether they get from SoftBank or not, they will always have enough capital,” exclaimed Bajaj. Recently, SoftBank proposed to invest in Uber.

Ola is present in 110 cities and claims to offer over 700K vehicles. While Uber is only present in 29 cities in India. After the USA, Uber is present in the most number of cities in India.

Speaking about the concern for VCs, he said, “Biggest worry is capital inefficiency. I think much capital coming into companies create issues.”

Bajaj who had been pessimistic about the growth of start-ups in the past is now feeling that the time exciting for the India growth story. He also thinks that entrepreneurship in India now is going through normal phase, neither it is bubble nor a bust. E-commerce is in bust phase.

“I have been investing personally for 12 years in India and when I look back, there were probably two or three periods which I would say were normal, otherwise we were either in a bubble or a bust. Currently, we are in a normal period and last such period was 2012-13, when we invested in Ola, Mswipe, Practo and the bunch of our winners,” added Bajaj.

Among things that VCs look for before investment, are nonlinearity and returns. Technology is one of getting to nonlinearity, he added.

Matrix Partners has invested in many companies Ola, Practo, Dailyhunt, Quikr, Housejoy, LimeRoad, Mswipe and Cloudnine. He also thinks among his investment Ola, Daily Hunt, Quikr and Mswipe are out performing others in their segments.

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