“We started off thinking we would be creating business, which would be a game-changer and we would be converting an unorganised market into an organised one in the legal way. Then, there was the so-called market disruption with players coming in and creating an app where any car or tourist taxi can be attached and one can avail of the services. We thought this might not last long and the government would come hard on it; we decided we will continue doing what we are doing and wait and watch,” said Gupta.
Speaking at the Entrepreneurship Summit organised by the Entrepreneurship Cell of the Indian Institute of Technology Bombay, Gupta added he realised the need for capital for turning things around. Meru Cab Company plans to raise $100-150 million to fund expansion needs and technology upgrades. “We’re talking of a large market being created. We were a traditional taxi company and we realised we also need to change. The market is going bigger and getting converted into an industry. So it is a good thing. At times, we wondered if this segment would ever get organised and if people would look at it seriously. But with new players in, there is more awareness and consumer want to use these services,” said Gupta.
Olacabs, Meru’s competitor in the segment, was founded in January 2011 by IIT Bombay alumnus Bhavish Aggarwal and Ankit Bhati. The company connects users to independent cab drivers allowing them to book intra-city rides. From merely five cities in January 2014, Olacabs has grown to 67 cities. According to Anand Subramanian, director of marketing communications, Olacabs, there has been a 40 per cent month-on-month growth in the firm’s India business. TaxiForSure is also seeing a 40-50 per cent growth on a month-on-month basis, according to Aprameya Radhakrishna, founder and director, TaxiForSure. This year, it has already launched into 10 new cities. The firm has begun making auto bookings available on its platform, similar to its competitor Olacabs. In October 2014, Olacabs said it had raised $210 million (Rs 1,260 crore) from a group of investors led by Japanese telecom and media group SoftBank Corp.
In November 2013, Olacabs had reportedly raised $20 million from Matrix Partners India for a minority stake, with participation from existing investor Tiger Global Management.
TaxiForSure was founded four years ago by IIM Ahmedabad graduates Raghunandan G and Aprameya Radhakrishna. Its investors include Helion Venture Partners, Accel Partners, and Bessemer Venture Partners.
Keeping the safety of woman passengers, car rental firms are increasingly taking a lot of measures. Subramanian said Olacabs recently started a 'pink service’, which will have woman drivers. Plus, the company is getting geo-positioning system hard-fitted into the car, so that it cannot be removed.
Why this company doesn't get investors
If you are a resident of Mumbai, or have been to the city recently, there is some chance you might have spotted Viira Cabs- a cab service for female passengers by female drivers. However, you might not have spotted too many of them on the roads, because of the small fleet size. Viira Cabs is on the lookout for funds to scale up, but investors are hard to come by.
Revathi Roy, co-founder of Viira Cabs said that Viira Cabs needs to mobilise and train women on an industrial scale, for which money is required. However, investors don't look at the service as a business. “When we approach investors for funding, they term us as a ‘social enterprise’. We are not a social enterprise, we are here for business,” she said.