Home / Business / Sequoia India and Accel back on-demand scooter startup in $12.2M deal

Sequoia India and Accel back on-demand scooter startup in $12.2M deal

Two of India’s most prominent VCs are backing a motorbike on-demand service after Sequoia India and Accel led a $12.2 million investment in Metro Bikes. Sequoia India and Accel were joined in the round by Raghunandan G, who founded TaxiForSure which sold to Ola, among other investors.

Metro Bikes started out as a luxury bike rental service in 2014 — initially as “Wicked Rides” — and it launched scooters (motorbikes) and other two-wheel rentals in 2016. Now, the company is rebranding to Bounce and refocusing its business to on-demand scooter (that’s motorbike in U.S. parlance) rentals for first and last mile transportation. The idea is to appeal to commuters, who can pick up a bike at their nearest location and later leave it at an endzone. The cost is based on distance and time spent.

Bounce is currently present in Bangalore, where it has 2,000 scooters currently, and Hyderabad, where it has around 500. The plan is to increase those numbers but the company is waiting on a permit to operate electric scooters, once it gets that it will only deploy electric, CEO Vivekananda Hallekere told TechCrunch in an interview. Its current mix of vehicles also includes bicycles, electric bicycles and kick scooters available.

The startup is going to hone its focus on Bangalore and Hyderabad for now, with no new expansions for 6-10 months, he added. Looking further forward, Bounce is aiming to be nationwide by 2020, while Hallekere said he sees the potential for deployment in Southeast Asia in the future.

Bounce claims that it is currently seeing around four rides per vehicle per day on its on-demand platform, the company is targeting seven to twelve rides which it believes will bring it to a good level of revenue. Although Hallekere did stress that the core business is anchored in sustainability.

That’s down to the funding of the fleet, which the CEO said is financed by institutional investors who purchase the assets in exchange for a cut of revenue. That helps cover a significant portion of operating expenses, while in other cases Bounce works with OEMs who provide vehicles under similar terms.

Bounce’s founding team (left to right): Vivekananda H R, CEO; Varun Agni, CTO; Anil Giri Raju, COO

Bounce is entering a fairly congested market in India, with other startups include Wheelstreet — which TechCrunch wrote about earlier this year — ZipHop also competing with similar services. Hallekere, the Bounce CEO, said that the company’s history in the business and its technology can help it stand out.

Added to that, Bounce said it is working closely with authorities to help ease last mile congestion. For example, the company is one of a number to have a struck a deal with Bengaluru Metro Rail Corporation Ltd. (BMRCL) to put rental bikes at 36 metro stations. It also landed a deal with corporate to enable parking across the city. The company said it plans to pursue similar arrangements with metro operators in Hyderabad and other cities when it expands.

“The first mile and last mile are essential to having public transport work in India,” Hallekere said. “It’s very natural for Indians to go on scooters and we started with metro bikes keeping this in mind. We want to make an impact and enable people to ditch cars.”

Bounce is also looking to introduce a pooling service that would enable scooter owners to add their vehicles to the company’s fleet and make money when they are used.

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Chinese Tesla rival Nio files to raise $1.8 billion in US IPO

Tesla may be looking to go private, but Chinese rival Nio is going the other way after it filed to raise $1.8 billion in an IPO on the New York Stock Exchange. Nio was started in 2014, initially as NextCar, by Bin Li, an entrepreneur who founded online automotive services platform Bitauto. The company is backed by Chinese internet giants Baidu and Tencent among others, and it has developed two vehicles so far: the EP9 supercar and ES8. The former is really a concept/racer car — it broke the electric vehicle speed record last year — but the ES8, pictured above, is a car designed for the masses which is priced at 448,000 RMB, or around $65,000. Nio opened sales for the ES8 last year but it only began shipping in June. Thus, to date, it has fulfilled just 481 orders, although it claims that there are 17,000 customers who put down reservations waiting in the wings. That means that, essentially, it is pre-revenue at this point. The company reported revenue of $6.9 million as of the end of June — so one month of deliveries — with a total loss of $502 million for 2018 to date. Last year, Nio lost $759 million in 2017, that included no revenue and nearly $400 million spent on R&D. Nio may be in the same space as Tesla, but its approach differs from the U.S. firm. The company operates ‘clubhouses’ where it sells to new customers and allows existing owners to come to spend time, while it also goes direct to consumer with mobile-based sales. (Not, unlike, say an early Xiaomi model.) Nio’s pricing is more focused on mid-market and, without a charger network like Tesla (most Chinese households would struggle to charge at home), it has developed its own unique way to handle battery charging. Its vehicles support battery swapping at dedicated stations while it operates a range of roaming charging trucks can reach users who are low on juice. Those on-demand charging services come as part of a subscription-based package which will add further revenue beyond car sales. Further down the line, the company said its vehicles will be compatible with the national EV charging network China is developing so that’ll help on the charging front, too. Like China’s infrastructure play, Nio itself is very much a work in progress. Indeed, case in point, it doesn’t yet operate its own factory. Right now, state-owned JAC Motors handles product but Nio has pledged to invest $650 million to construct its own manufacturing plant in Shanghai. Nio’s current order backlog will take six to nine months to process, according to the filing, but its own factory could mean orders are dispatched to customers within 28 days of purchase. The interior of the NIO ES8 The company’s focus is China, but Nio has global roots. Shanghai is its headquarters and home to nearly 2,500 staff, but it also has teams in Munich (design), San Jose (software and self-driving) and London and Oxford in the UK, which handle vehicle concepts. Its executive team is predominantly Chinese but one familiar name is Padmasree Warrior who is the head of Nio’s U.S. business. The former Motorola CTO joined the company in 2015 after calling time on Cisco, where she spent seven years and had been chief technology and strategy officer. Despite an international setup, there’s no word in the filing on whether Nio has a timeframe for selling vehicles outside of China. For now, the company cites analyst data claiming that “China is a clear leader in the global EV market” with sales growing from 21,800 in 2013 to 740,900 units last year. That’s despite the Chinese government cutting back on some of its generous subsidies aimed at encouraging early ownership of EVs and eco-friendly hybrid cars.

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