Softbank-backed Ola has made a commitment to invest $100 million in scooter sharing start-up Vogo as part of a deal that will allow customers of the ride-hailing firm to get access to two-wheeler rentals from within its app.
The capital that Ola invests will go towards adding 100,000 scooters to Vogo's fleet, and is part of the strategic partnership between the two firms. The investment will be made in tranches, the first of which was received by Vogo as part of its Series-A investment in August.
Vogo had raised around $7 million in its first round of institutional funding led by Ola, with participation from Matrix Partners, Stellaris Venture Partners and Hero MotoCorp chairman Pawan Munjal's family office.
"Our investment in Vogo will help build a smart multi-modal network for first-last mile connectivity in the country. Vogo's automated scooter-sharing platform, backed by Ola's expertise in this space, can help transform our cities," said Bhavish Aggarwal, co-founder and CEO of Ola, in a statement.
Ola's move to invest in Vogo is in-line with the ride hailing platform's move to morph into a mobility provider rather than just a cab company. It also signal's the company's move to tap the scooter rental space, which has been seen as growing massively in the past one-two years in major Indian metros.
The company did not outline how quickly the investment of $100 million will be made in Vogo, but a source close to the deal said it would depend on the scooter rental start-up's appetite to absorb the vehicles.
He added that while Munjal's investment in the company could be to align Vogo's vehicle purchasing to benefit Hero MotoCorp, no such exclusivity deal has been signed.
The Hero MotoCorp chairman's investment in Vogo is similar to Ratan Tata's investment in Ola, which was done in his personal capacity.
"Vogo has seen rapid growth in the past five months, growing over 10x in scale. We are thrilled to have Ola join us on this journey and help turbocharge our growth by providing us access to strategic and capital efficient supply as well as access to millions of customers on its platform in the time to come," said Anand Ayyadurai, founder and CEO of Vogo.
Ola's investment in Vogo will give its users access to scooter rentals, apart from cabs and autos on its platform, in Bengaluru, Hyderabad and other cities as the start-up scales across India in the coming months. Vogo, on the other hand, will get access to the 150-million-plus customer base that Ola claims it has.
As it looks to fend off rival Uber, Ola is actively looking at diversifying its business to attract funding from both new and existing investors. For this, the company acquired Ridlr, a provider of information and ticketing on public transport, apart from its acquisition of online food ordering app FoodPanda. It also experimented with bicycle sharing at a select few college campuses last year and is building an electric rickshaw for use as first and last-mile connectivity in cities.
Riding into new markets
- The capital from Ola will be used by Vogo to acquire 100,000 scooters
- Ola customers will be able to book a bike on Vogo from within the app
- Vogo will get access to the 150 million claimed customers that Ola has
- The start-up had raised around $7 million in Series-A funding led by Ola
- Hero MotoCorp Chairman Pawan Munjal is also an investor in Vogo