RentOnGo, an online marketplace for renting bikes, was forced to shutter operations when rival Bounce, owned by Bengaluru-based Wickedride Adventure Services, decided to pull the plug on an acquisition deal at an advanced stage, the startup alleged.
In a post on the blogging platform Medium, Nikhil Chhabra, co-founder and CEO of RentOnGo blamed the Bounce board for pulling out of the deal without any formal communication after signing a term sheet and after completing due-diligence process.
“By end of Dec 2018, everything was cleared from the DD (due diligence) team. This is when the real ordeal began. 10 months of excruciating pain that I personally as the founder and every shareholder of RentOnGo has had to go through. During this period every call/WhatsApp message to Bounce was either met either with ignorance or a string of common excuses — “we are raising more money, so will need more time”, “board is not approving the deal and taking time” and so on,” Chhanra said in the the blog post.
RentOnGo, operated by Condivision Solutions and also based in Bengaluru, was founded by Chhabra and Vikash Jalan in 2012.
Chhabra, who holds an MBA from IIM Calcutta, earlier worked with HCL Technologies. Previously, he also worked with US-based IT firm Unisys Corp and Citibank. Co-founder and CTO Jalan earlier worked with Goldman Sachs, Infosys and Otis Elevator Company.
Initially, the startup listed products provided by vendors under around 15 categories, including bikes and scooters, vehicles (cars), electronics and appliances, furniture (both home and office), medical supplies, costumes, events and wedding supplies and adventure gear, among others. It later deepened its focus in the bikes category by launching a dedicated app for bike rentals and pivoted fully to bike renting.
According to Chhabra, the monthly capital burn was too high for the startup to sustain and therefore, it began to hunt for potential suitors. It began negotiations with Bounce and received a term sheet in October last year. The due diligence process was completed by the end of December 2018 and that was the end of it, he claimed.
“Whenever we challenged the very basis of having given a term sheet and going through entire DD, all we got was a threat of calling off the deal. And no surprise that during the DD the entire confidential data of customers was shared. Till date we have not received an email/call from Bounce to even share any reasons/logic or even stating in writing that they cannot go ahead with this deal,” he wrote on the blog.
“But the kind of treatment we have received from Bounce as part of this M&A deal is very disturbing. I don’t want to be blaming anyone specific here, but I think the entire board of Bounce comprising of founders and investors, who approved the deal in 1st place to go ahead with Term Sheet and DD, should have stood up to the new board members,” he added.
Rentongo first raised an undisclosed amount of angel funding December 2015 from Snapdeal’s former chief product officer Anand Chandrasekaran, GSF India founder Rajesh Sawhney, Kalpana Tatavarti (partner, Interweave Consulting), Shivanandan Pare (head of e-commerce, Madurai Lifestyle & Fashion) and other angel investors.
Between 2017-18, Chennai-based two-wheeler manufacturer TVS Motor Company Ltd invested Rs 2 crore in RentOnGo in two tranches to own 29.6% in the company.
Vivekanand Hallekere, co-founder and CEO of Bounce, has denied the allegations and said the decision to end M&A pursuit was communicated to RentOnGo.
Responding to Chhabra on the same blog, Hallekere said that the startup had decided to cease its operations even before the discussions had begun and Bounce’s initial interest was to offer TVS Group equity in the merged entity (should a deal go through) for its holding in RentOnGo. However, he claimed the due diligence process revealed that RentOnGo was operating without required commercial insurance and license to rent vehicles, which posed unlimited damages.
“The biggest disaster was you decided to go ahead and send notification to all your users that RentOnGo was shut even before completing the DD. If you are telling your current users that RentOnGo is shut, what are we getting ? So request you not to blame it on Bounce or the board for shutting down RentOnGo,” he wrote in his response.
Bounce initially offered motorbikes and scooters on a rental basis primarily to urban commuters. It tweaked its business model to a dockless scooter-sharing service but has continued to run its rental business.
Besides Bounce, the company also operates WickedRide, a premium motorbike rental platform that includes brands such as Harley Davidson, Benelli, Royal Enfield, Kawasaki, Triumph, Ducati, KTM and Americana. With the acquisition of bicycle-sharing unicorn Ofo’s India assets, Bounce also offers dockless bicycle sharing.
TechCircle reported recently that the company is close to finalising a $200 million funding round. The company’s existing investors are expected to bring in 50-70% of the round, multiple people privy to the development told TechCircle.
In its previous investment round, the company had raised around $72 million in its Series C round led by Facebook co-founder Eduardo Saverin’s venture capital firm B Capital and New York-based hedge fund Falcon Edge Capital.
Venture capital firms Accel, Chiratae Ventures, Maverick Ventures, Omidyar Network India, Sequoia Capital India, Qualcomm Ventures, and Flipkart co-founder Sachin Bansal are among the firm’s other investors.