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Startups

SoftBank leads $1.5bn fresh investment into India's Oyo

Hotel startup will use the capital to expand in the US and Europe

An OYO hotel in India: The startup is growing fast by turning existing hotels into franchises. (Photo by Akira Kodaka)

MUMBAI -- Indian hotel startup Oyo said Monday it will raise $1.5 billion in a fundraising round to be led by the founder along with Japanese tech conglomerate SoftBank Group.

Ritesh Agarwal, Oyo's founder and CEO, said he will inject $700 million of his own money through a separate company he controls. The other $800 million will come from SoftBank's tech-focused Vision Fund and other existing shareholders. The company has an estimated value of $10 billion.

The fresh capital will go toward expanding operations in the U.S. and Europe, which are considered growth markets. Oyo raised $1 billion last year from the $100 billion Vision Fund, as well as from backers such as U.S.-based Sequoia Capital.

Oyo turns existing hotels into franchises and provides them with management know-how. Its algorithm analyzes supply and demand for rooms in real time, letting hotels set rates that maximize earnings.

The startup receives franchise fees and a share of the hotels' earnings. Its August revenue jumped 280% from a year earlier.

Six years since its founding, Oyo has 1.2 million rooms in over 35,000 hotels spread across roughly 80 markets including China, the U.S. and Japan.

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