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Bike sharing startup Vogo in talks with Goldman Sachs for $50 million; Bounce gets commitment of $75 million

While Vogo is in talks to raise $50m from Goldman Sachs, rival Bounce is eyeing $75 million.

, ET Bureau|
Updated: Sep 10, 2019, 09.20 AM IST
BENGALURU: Global growth and late-stage investors are backing home-grown scooter sharing startups Vogo and Bounce, which are largely solving for short-distance mobility needs of customers in cities, multiple investors that ET spoke to indicate.

Vogo, backed by ride hailing major Ola, is in talks to raise close to $50 million in equity financing from Goldman Sachs, three people aware of the talks said. Its closest rival Bounce is also close to raising its next round with soft commitments of $75 million from existing investors Accel Growth, B Capital, Falcon Edge and Sequoia Capital, sources in the know said.

Goldman Sachs declined to comment, while an email to Vogo did not elicit a response till press-time on Monday. Bounce declined to comment on future fundraising plans.

Recently, WestBridge Capital led a $50 million funding round in Rapido, a bike taxi startup, valuing the company at Rs 1,000 crore post-money. Rapido, which wants to tap the next 200 million commuters, is present in 40 cities and competes with Vogo and Bounce to provide last-mile connectivity.

“The bet is on creating an alternative to India’s public transportation system, along with potential positive unit economics once transition to electric scooters kicks in,” said a US based-investor who is set to invest in the space. "The market is model will continue to evolve over time," he said.

Other funds that have evaluated the space include Samsung Venture Investments, Naspers, SoftBank, Mirae Asset Management, General Atlantic and TPG. Last month, ET reported that Tiger Global was also evaluating investing in Vogo. “The belief is that scooter is the right form factor for Indian roads and the marker need itself is far higher than in developed economies,” said another investor.

Risk investors believe that, while taxi aggregators Ola and Uber have addressed the problem of urban commuting, an equal, if not larger business is waiting to be tapped by scooter sharing businesses, given that India is the world’s largest two-wheeler market.

In fact, over the last few months both companies have expanded operations to smaller towns and cities, including Mangalore and Kolar to validate if it indeed has a use case beyond top cities. However, the asset heavy and operationally challenging aspects of the business, including servicing of fleet, asset rebalancing costs among others, are emerging as pain points.

Vogo and Bounce claim to be clocking between 50,000-70,000 rides per day. This comes at a time when India’s ride hailing industry is witnessing sluggish growth. ET reported earlier that the on-demand cab industry did 3.65 million rides daily on average in the six months to June, rising 4% over the 3.5 million rides a day in 2018.

Vogo operates a scooter sharing network that allows users to pick up vehicles from designated points throughout the city and drop them at any of the closest designated points at the end of the ride. Bounce’s model lets users pick up a scooter from the closest location and drop it at the destination.

For both startups, the process is completely automated –— the scooters are equipped with hardware to allow auto lock/unlock through an app, remote tracking of vehicles and remote diagnostics of the status of the scooter.

Investors say, over time both business models will converge to a hybrid model of dock and dockless. As of today, both companies own or lease these scooters from their own books, hence making the business a high capital deployment game.

Also Read

Tiger Global, Vogo in $50 million talks

Alteria leads Rs 25 crore funding in scooter-sharing firm Vogo

Vogo beefs up leadership team with key hires from Rivigo, Nestaway

Scooter sharing startups Vogo, Bounce raise debt from BAC

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