Go to any bus stop in India’s major cities and you are more likely to see hoards of people waiting for buses that are often delayed and overcrowded.
The popularity of cab-hailing services like Ola and Uber has risen manifold, but they remain unaffordable for the majority of Indians who depend on cheaper means of transport such as metro trains — in the couple of cities where they run — and buses.
Now two startups are addressing the problem by launching apps that hail motorcycles. For the millions of people waiting at bus stands to go to work, this can indeed be an affordable solution. And investors agree.
“There is a huge market opportunity, just in last-mile transportation. The value proposition, compared to existing alternatives, is amazing. Their strategy includes full access in every city they launch, with a five-minute access,” said Manish Kheterpal, managing partner of private equity firm WaterBridge Ventures, who has invested in Baxi, a Gurgaon-based startup that plans to launch Tuesday. Other investors include Alok Mittal, founder of technology startup Indifi Technologies, and Puneet Dalmia, managing director of cement manufacturer Dalmia Bharat Group. Together, they have put in Rs 10 crore ($1.5 million), making it one of the largest seed rounds in India.
Baxi’s founders, Ashutosh Johri and Manu Rana, both graduates of IIT Delhi, spent close to a year setting up operations are getting the required permits from the government of Haryana — including the license to ply two-wheelers as taxis, something that has never been done before. The company will have 23 bikes to start with, and operate in Gurgaon, which has abysmal public transport infrastructure despite hosting the offices of some of the world’s most respected multinationals and having close to 30 malls, and seven golf courses. Unlike neighboring Delhi, which has several flyways and wider streets, Gurgaon’s narrow, potholed roads are choked with traffic, making it difficult to commute in cars.
That represents a big opportunity, which is why another two-wheeler hailing app M-Taxi, is also based there and said it had raised funding from angel investors Mandeep Singh and Jairaj Singh. M-Taxi’s motorcycles are designed to enable last mile connectivity from bus stops to people’s homes. M-Taxi was founded in February by Arunabh Madhur, who had earlier founded a media content company. He has a head-start over Baxi, having already started operations, although the latter might have more resources. The model is similar to that of GrabBike, which was started by southeast Asia’s cab-hailing service GrabTaxi.
India’s radio taxi market is estimated to be worth between $6 billion to $9 billion, and is growing at 17-20 per cent every year. Services such as Baxi and M-Taxi will help expand that market deeper into India’s poorly serviced towns and cities, where infrastructure has struggled to keep pace with the galloping rate of vehicular traffic growth.