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Softbank Wants To Invest $1 Billion In Ola, Co-founder Bhavish Aggarwal Is Declining It. Know Why

| Published on December 5, 2018

The Indian startup ecosystem is facing a very interesting scenario right now as foreign companies are putting millions of dollars into them to capture the market. At a time when most entrepreneurs money to fund their ventures, Ola CEO Bhavish Aggarwal is resisting to accept a $1 billion from Softbank.

Bhavish Aggarwal

The latest report published by ET has revealed that Softbank’s Masayoshi and Aggarwal have met multiple times recently but Bhavish is declining to take such a big amount from SoftBank has an imminent risk which Ola wants to avoid. he believes that this deal will give the Softbank too much control over the company he founded.

Source

Interestingly, he is avoiding Softbank which was one of Ola’s early investors, and currently owns 26% of the company. After investing a further $1 billion, Softbank’s stake in Ola will likely go up, and this could lead to Softbank dictating the direction in which Ola is run. With founders Bhavish Aggarwal and Ankit Bhati together holding a shade over 20% of Ola, they could soon be forced to cede control of Ola to Softbank. A similar thing happened with Flipkart after the Walmart deal as both the founders are no longer continuing with the dream they started together.

Also Read: What Walmart-Flipkart Deal Reveals About The Indian Startup Ecosystem

Sachin Bansal had even said that Indian founders needed more control over their companies after leaving Flipkart. He suggested other entrepreneurs to start using dual-class voting shares.

“Below 25% stake, entrepreneurs usually do not have much control on the main decisions, including mergers, unless separately agreed upon. Below 10%, which is a reality in many startups at late stage, founders can also be booted out,”

he’d said. Also, he is looking to invest some fund into Ola.

Also Read: Sachin Bansal Explains Why Indian Entrepreneurs Need More Control Over Startups

Ola founders are working to avoid this from quite a long time now. In 2017, they created a new Articles of Association agreement to prevent a takeover from Softbank. The agreement read that SoftBank, in particular, could not buy more equity shares in Ola without approval from the company’s founders and board of directors. Additionally, any transfer of equity shares by Ola investors representing 10% or more of the company’s capital would need to be approved by Aggarwal and Bhati.

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