Exclusive: Singapore fund in talks to invest in inter-city ride startup InstaCar
Indore-based InstaCar Technologies Pvt. Ltd, which operates an online outstation taxi marketplace, is in the process of raising funding in a fresh round, two persons in the know told TechCircle.
The funding is likely to be $20-30 million, one of the persons said. The round, which will be led by a Singapore-based investment fund, will also see the participation of existing Hong Kong-based investor Swastika Company Pvt. Ltd, the person added. The name of the Singapore fund could not be immediately ascertained.
In September 2016, Swastika had invested seed funds worth $1 million in the firm.
In anticipation of a fresh round, InstaCar had increased its authorised share capital from Rs 2 lakh to Rs 3 crore in April this year, showed company’s filings to the corporate affairs ministry. Authorised share capital represents the maximum value of share capital that a company can issue.
The second person said that the company is now in advanced stages of closing this round and a formal announcement is expected by September. The company is raising funds for its geographical expansion.
The company, which operates in seven cities, is looking to launch services in up to 13 more cities, the second person said.
As of now, the company’s markets are Indore, Ujjain, Bhopal, Mumbai, Pune, Visakhapatnam and Bengaluru.
The startup sees more than 100 bookings a day, according to the LinkedIn account of Ishan Vyas, co-founder and chief executive of InstaCar, who declined to comment on the funding.
Before news of the funding came out, InstaCar’s site had gone offline for two days, which Vyas attributed to a temporary scaling down of operations necessitated by a shift of base to another city. Now, the site is up and running. “We are shifting our operational base from Indore to Bengaluru. Our primary business works on call centre and our number is still working, though the flow has been reduced due to the shift in our office,” Vyas said. “But all existing customers are being catered to, and you can still book the taxi from our call centre,” he added. Vyas also said the company is in the midst of expanding operations.
The company will also launch a mobile app soon, he added.
InstaCar was founded in August 2016 by Vyas, Priyanshi Choubey and Anurag Gupta. Gupta, according to his LinkedIn account, exited the venture in June 2017. A finance and marketing professional, Vyas had earlier founded Aspricot SoftLab Pvt. Ltd, an enterprise information technology company. Choubey, a management professional, worked as an analyst at Aspricot.
InstaCar provides inter-city car rentals, offering one-way rides up to 400 km. The startup offers choice of cars, models, luggage carriers and others. Currently, the company has 3,000-4,000 cars on its network.
In October last year, YourStory, an online platform for startup-related stories, had reported that InstaCar had launched a card that allows drivers instant access to funds.
Inter-city cab space in India
The funding, when it materialises, will come at a time when the space is gripped by negative investor sentiment.
According to industry experts that VCCircle had earlier spoken to, the inter-city cab space, while undoubtedly offering a huge market, also faces challenges such as high costs of customer acquisition and few repeat clients. Also, deep-pocketed players like Ola and Uber operating in the same space pose significant problem for investors.
In 2016, Ola, which offered inter-city service in its initial years, relaunched it in a big way in 2016. Likewise, Uber entered the space with a pilot in May 2015.
In September last year, Delhi-based Vecto Technologies Pvt. Ltd, which operated inter-city cab aggregator Roder, shut down operations.
An industry observer, who did not wish to be identified, said that it is important for the companies operating in this space to get the demand-supply dynamics right.
“More often than not, companies scale down or shut down in this space because of the mismatch between their tech capabilities and ground operations. Operating on good tech is default and cannot be the USP (unique selling proposition) of inter-city cab play. More than 90% of this business is more about getting control of the driver (and eventually pricing) and getting the demand-supply side of things right,” he added.
When aggregators go to third-party vendors to onboard drivers, they cede price margins and suffer from a lower quality of human resources, said the observer.
Other funded players in the space
Besides InstaCar, the space also other funded players significantly smaller in operations.
In November last year, online aggregator for outstation travel AHA Taxis raised an undisclosed amount in pre-Series A round from ah! Ventures and Lead Angels Network.
Likewise, in February, inter-city cab rental platform MyTaxiIndia Pvt. Ltd raised an undisclosed amount from a Dubai-based investor to expand its operations.
In July 2016, inter-city taxi service provider Wiwigo Technologies Pvt. Ltd raised Rs 4 crore ($595,000 million) from Indian Angel Network (IAN) and two persons.
In June 2016, reports had said that Ahmedabad-based OneWay.Cab, a single-way taxi service provider, had also raised $450,000 funding from IAN.
Around the same time, in May 2016, cab aggregation startup TaxiVaxi had raised $500,000 (around Rs 3.4 crore) in its second round of angel funding from a clutch of persons.
In 2014, Intel Capital, the global venture capital investment arm of Intel Corporation, pumped an undisclosed amount in Bengaluru-based Savaari Car Rentals.