Bangladesh-based two-wheeler ride-hailing app company, Pathao is understood to be close to completing its Series A investment round with an international investor, that could possibly include Indonesia’s Go-Jek, according to two people familiar with the development.
The startup is learnt to have inked a non-disclosure agreement for the same, the people mentioned above added.
Sources indicate that Go-Jek was actively looking at investing in Pathao and is a likely candidate for an initial investment in Pathao.
When contacted by DEALSTREETASIA, a Pathao spokesperson commented saying that, “We cannot disclose our fundraising status as we are bound by NDA. We can confirm that we are seeking to raise Series A. We can also confirm that your information is not fully accurate.”
Go-Jek also replied to DEALSTREETASIA saying: “We cannot comment on rumour, we don’t have any official statement”.
Pathao – also dubbed as the Go-Jek of Bangladesh – is looking at raising less than $5 million as it is not keen on selling majority stake at this point of time. If the deal goes through, experts say, Go-Jek will get an exposure into one of the most populated and untapped frontier markets, where traffic, like Indonesia, is a big concern.
DEALSTREETASIA had earlier also reported that Pathao was in talks with multiple venture capital funds to raise around $5 million in its Series A round, however the deal with Go-Jek is learnt to have advanced in the last few weeks and the deal size is still unknown.
Founded by Hussain Elius in 2015, Pathao started out as a delivery partner to e-commerce merchants and now claims to be the biggest e-commerce delivery company in Bangladesh.
In 2016, it expanded into the ride-hailing transportation space with a fleet of motorbikes. They are also looking at expanding in different verticals like food delivery. Elius has been quoted in several media reports as claiming that Pathao does “thousands of rides”.
According to Crunchbase, Pathao had raised an undisclosed amount in its seed round from Battery Road Digital Holdings in October 2015.
In the last one year, Go-Jek has made five acquisitions like LOKET to dominate event management and ticket space in Indonesia in August 2017. It acquired Pune-based Leftshift, a mobile app developer, to strengthen its technology hold in November 2016. In October last year, it acquired MVCommerce, an Indonesian e-payment startup. Last year, it also acquired Pianta, a Bangalore based mobile platform, and C42 Engineering, a boutique software engineering firm.
It has also made joined a Series A investment round in Halodoc, a healthcare network platform, in Indonesia. If the deal goes through, Go-Jek’s investment in Pathao will be one of its first investments in a new region in a company which has similar operations as its core business.
Sources also indicate that Tencent, one of the investors in Go-Jek, was keen on that the Indonesia player invest in Pathao.
Dhaka, the capital of Bangladesh, is among the world’s most congested cities. In a recent report, the World Bank noted that average traffic speed in the city has dropped from 21 km/hour to 7 km/hour, only slightly above the average walking speed, in the last 10 years. Congestion in Dhaka is estimated to eat up 3.2 million working hours per day. Other ride-hailing companies in Bangladesh include BDCABS, Chalo, Garivara, Taxiwala, and bike-hailing startup Amarbike.
BDCABS, which allows users to hail an auto-rickshaw as well as cars, had last year raised seed funding from Turkish startup accelerator Etohum. While the amount of the investment was not disclosed, the round valued the company at $6.5 million.
US ride-hailing giant Uber, too, launched its operations in Bangladesh in November last year. However, just three days after the roll-out, its services were declared illegal by the country’s transport regulator, Bangladesh Road Transport Authority (BRTA). The BRTA said, Uber had launched its service in Dhaka without permission from the authorities.
The company has since resumed its operations in the country. BRTA recently came up with draft guidelines for ride-sharing firms in a bid to ensure service quality and passenger security. India’s ride hailing startup Ola is also planning to launch operations in Dhaka, its first market outside of India, by the fourth quarter of this year, according to a report by The Ken. The firm also plans to expand services to Chittagong later.
Ride hailing firms have emerged as an investor favourite around the world. Some of the largest deals this year include Chinese ride-hailing major Didi Chuxing‘s $5.5 billion fundraise in May and Indonesia’s Go-Jek raising a $1.2 billion Series C round.