OYO, a leading hospitality startup, has finalised significant fundraising of Rs 1,000 crore from Indian family offices. This development marks a major milestone for the company, which has been actively seeking funding to support its growth and expansion plans. The fundraising is expected to value OYO at around $2.5 billion, a significant down round from its peak valuation of $9 billion in 2021.
Fundraise Details
The fundraising is expected to be completed by the end of the month, with an initial allocation of around Rs 500 crore. The remaining amount will be allocated to institutional investors and other backers. The average size is expected to be around Rs 15–30 crore, although some investors may contribute more.
Investors
The fundraising is led by a group of prominent Indian family offices, including Anand Jain, a corporate strategy advisor, and former Reliance Industries executive, and the Juneja brothers, promoters of Mankind Pharma. Utpal Sheth, a close aide of the late market maven Rakesh Jhunjhunwala, also participates in the round.
OYO's Financial Performance
OYO has been working to improve its financial performance, with CEO Agarwal announcing in May that the company had clocked its maiden annual net profit of Rs 100 crore for FY24. This development has boosted investor confidence in the company, leading to significant fundraising.
Impact on the Startup Ecosystem
The fundraising is significant not only for OYO but also for the Indian startup ecosystem. It highlights the growing interest of family offices in late-stage startups ahead of OYO IPO plans. In the coming years, family offices are expected to contribute around 25–30% of total startup funding in India.
Cheques and Fundraising
The term "cheque" is often used in the context of fundraising, particularly in the context of large-scale investments. A cheque is a document that orders a bank to pay a specific amount to a designated payee. In the context of OYO's fundraising, the cheques are likely to be issued by the family offices and other investors participating in the round.
Electronic Cheques
In recent years, electronic cheques have become more common, particularly in the United States. The Check Clearing for the 21st Century Act, passed in 2004, allowed for the creation of electronic cheques and the truncation of paper cheques into electronic replacements. This has reduced costs and processing times for cheque transactions.
Payment Options
For employers and third-party administrators, there are various payment options available. These include mailing checks, using automated clearing house (ACH) credits, and making electronic payments through online bill pay. Each option has its own set of requirements and procedures.
KYC Directions
The Reserve Bank of India has issued Know Your Customer (KYC) directions, which require financial institutions to verify the particulars of entities and individuals involved in financial transactions. This includes verifying whether the individuals or entities are on designated lists and ensuring that funds and assets are not being used for illicit purposes.
Conclusion
OYO's Rs 1,000 crore fundraising from Indian family offices marks a significant milestone for the company and the Indian startup ecosystem. The fundraiser highlights the growing interest of family offices in late-stage startups ahead of their IPO plans. As OYO continues to grow and expand, investors and industry observers will closely watch its financial performance and fundraising strategies.
