Ola Cabs has raised about $1.18 billion in total, in 7 rounds according to TechCrunch . Recently, it raised $500 million at a valuation of $5 billion. This provides the social media a large amount of content to get agitated about, saying goodness, how can a taxi company that doesn’t own any taxis be worth more than 30,000 crore rupees! But they aren’t exactly valued at that much. You just got conned by the headline. Some investor has 10% of the company and they paid $500 million. That’s where the facts stop. Then you extrapolate, saying oh, if his 10% is worth $500 million, the company should be worth 10 times that? Wrong. Because he’s not just an arbitrary investor. He has the power of those two words: Liquidation preference . (LP) What is an LP? And Why Can’t They Invent Better Acronyms? To the Second, I am with you. I can feel your pain, though I haven’t held a vinyl record in the last 10 years.… (Read On…)
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