India-based Oyo Hotels & Homes reported financials to the market recently and the company is burning significant cash. We see worrying signs that another company backed by Masayoshi Son’s SoftBank Group is looking vulnerable – just like WeWork.
While the Indian hospitality startup is undoubtedly a success story, having achieved a US$10 billion valuation after raising US$3.2 billion of capital in just six years, it appears that a bold growth strategy may have been pushed too far.
The two charts below show the scary parallels between Oyo and WeWork’s meteoric rise in valuation. We see substantial risk of a down-round should Oyo need to raise more capital.