Olacabs has been on a fast growth track ever since its launch in 2011. The cab service already extends across nine Indian cities. Now a fresh infusion of funds will take it to 20 cities by the end of the year, if everything goes to plan.
Tech in Asia reported that Mumbai-based ANI Technologies, which owns Olacabs, has raised US$41.8 million in series C funding from Steadview Capital and Sequoia Capital besides existing investors Tiger Global and Matrix Partners India.
Olacabs and competitors like TaxiForSure, which received US$10 million two months back, have an aggregator model. That is, they partner cab drivers or taxi operators, instead of owning fleets. This enables them to scale up rapidly. UberX, the cheaper version of Uber’s main service, which is available in Bangalore, operates similarly.
The challenge for all of them is to sign up enough drivers to respond to customer calls anytime, anywhere. Right now the demand-supply gap is so huge that requests have to be rejected in peak hours.
One way to increase the supply is to help drivers buy cars and start their own taxi services. Olacabs calls it a micro-entrepreneurship initiative. It has tied up with car manufacturers like Mahindra, Tata, Ford and Maruti to enable car ownership at lower costs.
Recently, hundreds of cars got sold in a single day under this program, during a ‘Driver Mela’ in Bangalore and Pune. It plans to step it up further. “We are happy to announce that we are earmarking a sum of INR 100 crore (US$16 million) towards nurturing this ecosystem in the next one year,” Olacabs co-founder Bhavish Aggarwal says.
The initiative is a way of expanding the Olacabs supply indirectly. The money will also go into rolling out the enabling technology and administrative services in more cities across India.
Gautam Mago, principal, Sequoia Capital India, one of the two new investors in Olacabs along with the Hong Kong based Steadview Capital, explains the company’s value proposition:
The need for quick and efficient point-to-point transport is very large in urban India. Ola is the leader in addressing this need via technology, benefiting both consumers and drivers.