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Uber, local startups ramp up investment in bus-hailing services

Move over ride-hailing. Bus-hailing apps are picking up steam. The momentum is strongest in developing countries, where concerns about pollution and traffic congestion are mounting. Plus, many developing countries have a long history of mass transit use.

And although they have yet to achieve the scale of their car-hailing peers, a growing number of venture capital-funded start-ups are staking a claim in the rapidly growing market. India is taking the lead. Last week Gurugram-based Shuttl, an early entrant, reported it had landed $7.2 million as part of a Series B funding round, according to DealStreet Asia. Participants included Sequoia Capital, Lightspeed India Partners and Times Internet Ltd., a subsidiary of Indian media house Bennett Coleman and Co.

While the dollar figure is small compared to the hundreds of millions being invested in ride-sharing companies, it is notable for being the latest in a series of fund raises Shuttl has completed in the past 12 months. The start-up secured $1.4 million from Trifecta Capital in January, following a round of $11 million led by Amazon India, Amazon Alexa Fund and Dentsu Ventures in July 2018.

Founded in 2015, Shuttl has raised a total of $43.8 million, according to CrunchBase.

Big players are circling the market. Last year Uber launched a bus program in Cairo, Egypt as well as Monterrey, Mexico, and the company plans to add staff to its Seattle-based “‘high capacity vehicles team,” as the Uber bus program is called, GeekWire reported today.

“We’re seeing the growth of this product take off faster than UberX did when it launched in [those cities] – really early on, there are signs of product market fit,” said Miraj Rahematpura, a product manager on the high capacity vehicles team, according to GeekWire. “We’re super excited to scale to a lot more cities.”

Uber and Shuttl, which is owned by Super Highway Labs, have a shared history stemming from Uber’s recent acquisition of Middle East on-demand cab hailing rival Careem for $3.1 billion. Last fall Careem acquired another Indian bus shuttle service app, Commut, in a deal that brought the latter’s talent and technology under the Careem umbrella, while shifting its customers and drivers to Shuttl, Bloomberg reported.

That acquisition helped Shuttl grow services to include around 700 buses, and the company now claims around 45,000 rides per day on 130 routes in eight cities.

Like other bus-sharing companies, also known as microtransit or on-demand buses, Shuttl features private shuttles that run multiple routes, and customers use an app to find and purchase tickets for seats on multiple routes. Company co-founder Amit Singh has said the goal is to reduce pollution and traffic in crowded cities like Delhi by encouraging people to take mass transportation.

Lots of reshuffling is underway in this new mobility sector. Ola, Uber’s main competitor in India, shut down its bus unit Ola Shuttle last year. (Ola is now reportedly in talks with Uber to acquire the latter’s operations in India.) But a number of other bus-hailing startups remain – Shuttl’s competitors include Bengaluru’s ZipGo and Mumbai’s Cityflo.

The market is trickier to crack in the U.S., where most cities lack urban density and a history of transit ridership. In January, the app-based shuttle service Chariot shut down, two and one-half years after being acquired by Ford for a reported $65 million. Uber shuttered a carpool service called UberHOP more than three years ago.

 

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Linda Baker, Staff Writer

Linda Baker is a FreightWaves staff reporter based in Portland, Oregon. Her beat includes early-stage VC, freight-tech, mobility and West Coast emissions regulations.

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