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Spreading cash like manure

Start-ups are on steroids due to the deluge of cheap capital. Is it too much, too soon?

By the end of September, Ritesh Agarwal, founder and CEO of OYO Rooms, has zipped through six different cities in less than a week’s time. All of 21 years of age, Agarwal wants to build the world’s largest budget hotel room aggregator and some of the biggest names in the venture world are backing his audacious dream. In January 2014, Agarwal raised ₹4 crore — his first round of capital — from Lightspeed Venture Partners. He raised a second round of $25 million from Sequoia Capital, Greenoaks Capital and Lightspeed in April 2015.

A month later, Agarwal met Nikesh Arora of SoftBank at Silicon Valley and they got talking. Evidently, Arora liked what he saw because by August 2015, accompanied by existing investors, SoftBank led a $100-million investment round in OYO Rooms, making this one of the largest bets on an early-stage company in India. “When I was building the company, my focus was not on how much capital I will be able to raise. Having access to capital is just one of the problems solved when you are building a company,” says the 21-year-old, who realised that he liked to do things differently when he wrote his first piece of code in third grade. Agarwal decided formal education had little use for him and went on to get selected for the $100,000-strong Thiel fellowship. 

And it is not just OYO Rooms that is attracting big bucks. There has been a marked difference in the venture capital deal landscape compared with just three years ago. In 2013, investors were warming up to the e-commerce story and Flipkart and Snapdeal managed to raise about $400 million between themselves. In 2014, as investors saw increased traction, the bets got a whole lot larger, with Flipkart and Snapdeal drawing in more than 50% of the funding raised — according to data by Venture Intelligence, both companies raised about $3.5 billion among themselves.

Rolling in the green

This year has seen a huge spike in the number of venture capital deals

The first half of 2015 not just saw cheque sizes getting bigger but also fundin

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