Ride-hailing platform Rapido is officially a unicorn after $120 million in its latest fundraising round. This mega-financing round is led by existing investor WestBridge Capital, which took the valuation to over $1 billion – making it the third unicorn startup of 2024 in India, after Perfios and Krutrim AI.
Background of Rapido
(Source: Business India)
Founded by Aravind Sanka, Pavan Guntupalli, and Rishikesh SR in 2015, Rapido started as a bike taxi aggregator under the brand “theKarrier.” This Bengaluru-based company has grown to be part of over 100 cities in India. While the firm began with just bike taxis, over time, it has added services such as auto-rickshaws and cabs to its portfolio, along with various hyper-local parcel delivery services. Rapido claims to have generated more than 500,000 jobs in India by the year 2019 and has also declared more than 1 crore registered users.
While offering its auto-rickshaw drivers a subscription package that allows them to keep more of what they earn, Rapido’s business model is one of the key factors in driver retention, thus keeping it competitive against its bigger rivals, Ola and Uber. Moreover, the company has had to fight many legal battles in several cities over the legitimacy of its bike taxi business but has elegantly overcome those challenges to build a robust market presence.
Funding Details and Investor Confidence
(Source: Crunchbase)
WestBridge Capital has infused the majority of its Series E funding of `1,000 crore or thereabouts, via different investment vehicles. According to regulatory filings accessed by ET, this capital infusion has been structured through three trusts linked with WestBridge, thereby making it an extraordinary commitment toward Rapido’s growth trajectory. This financing comes at a time when things have gotten tight in the startup ecosystem, with private financing drying up and only a few new unicorns born over the past two years.
In addition to the current funding, sources add that Rapido is also in the process of closing $20 million more from international investors, which would give it the additional financial muscle it needs to scale its operations across the country.
Competitive Landscape and Strategic Moves
Rapido’s rise to unicorn status has not been a one-time funding phenomenon; rather, it is strategically positioned in the competitive ride-hailing market. It initiated a subscription-based model for auto-rickshaw drivers, aimed at raising driver retention and competitiveness against peers such as Ola and Uber. The move is all the more important given that a zero-commission model service for drivers, backed by Google, called Namma Yatri, is consistently pushing at the doors of Rapido.
(Source: The New Indian Express)
Besides this, Rapido has diversified from bike taxis alone into cab services and hyper-local parcel delivery, thereby positioning itself as an end-to-end mobility solution. It will expand services in new cities with a target of markets hitherto dominated by larger players like Ola and Uber alone.
Financial Performance and Outlook in the Future
Rapido has raised a total of $329 million to date. Its financial performance has improved dramatically with operating revenue tripling to INR 443 crore in the fiscal year 2022-23, though this has come at the cost of increased losses, which widened to INR 675 crore during the same period.
The operational metrics of Rapido do not make for bad reading despite all the challenges. As of March 2024, the company claimed it is processing about 16.5 lakh rides per day on its platform, firmly establishing the entity as the second-largest in the ride-hailing space, just a shade behind Uber, while leaving Ola behind.
Conclusion
The entry of Rapido into the unicorn club testifies to the fact that Indian startups are here to stay and perhaps have tremendous potential amidst economic turmoil. With strong investor backing and an obvious strategy in place to enhance its offerings in services and increase its market reach, Rapido certainly has very bright prospects for growth in this dynamic ride-hailing industry. The challenges of steering through competition and scaling operations, with the recent success of funding, will be the turn that makes all the difference for this company.
