Uber rival Ola said to be seeking funds at 40% lower value

India’s foremost ride-hailing service Ola is pursuing a new round of funding that would give the company a 40 per cent lower valuation than it had a year ago, according to a person with direct knowledge of the matter, as the startup tries to amass capital to stave off a challenge from Uber Technologies Inc. The company is raising funds that value the company at $3 billion, a sharp reduction from the $5 billion figure during a previous financing round in November 2015. At the time it made Ola one of the nation’s four most valuable startups, alongside online retailers Flipkart and Snapdeal and digital payments operator Paytm. If the deal goes through, Ola would become the first Indian unicorn - a startup valued at a billion-dollars or more - to accept funds at a lower valuation, in what’s known as a down-round. Ola continues to negotiate with investors as it pursues a goal of raising over $600 million this time, but it’s had to peg its expectations lower, the person said, asking not to be identified because the discussions are private. Global funding for startups is slowing and investors harbour concerns about an increasingly aggressive Uber, the world’s most valuable and best-funded technology startup. This year is shaping up to be the roughest ever for India’s young technology companies. Foreign giants like Amazon.com Inc. and Uber have trained their sights on Asia’s third-largest economy, exacerbating intense competition. Investors have grown wary: India’s technology startups raised $4.23 billion in the first three quarters of this year, less than half the total for the same period of 2015, according to researcher Preqin. Even leading players like Flipkart are under pressure. The country’s largest online retailer has laid off hundreds after a bad run that cost its chief executive his job. (Saritha Rai/Bloomberg)

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