India’s unicorn creation machine appeared to have ground to a halt the last few quarters, but it slowly seems to be whirring back to life.
Rapido has become India’s latest unicorn startup after raising $120 million in a new funding round. The round was led by WestBridge Capital and valued Rapido at $1 billion. This makes Rapido the fourth startup in India to reach unicorn status in 2024 after Krutrim, Perfois and Porter.
Rapido was founded in November 2015 by Aravind Sanka, Pavan Guntupalli, and Rishikesh SR. Aravind Sanka had graduated from IIT Bhubhaneshwar and had worked with Flipkart, while Pavan Guntupalli was a graduate of IIT Kharagpur. Rishikesh SR was a graduate of PES University, and had previously worked on building a truck aggregator. Rapido was initially conceived as a bike taxi service which would cheaply ferry users on motorcycles, instead of in cars as with Uber and Ola.
But Uber and Ola too launched their bike taxi services around the same time, with both companies launching their services in March 2016 in Bengaluru. Much regulatory troubles followed for the industry, with bikes being impounded by police and bike taxi services being declared illegal in the city. As companies struggled to negotiate with regulators, Rapido tried to stay under the radar, and looked to keep running its operations.
There was clearly a market for bike taxis, which were cheaper and often faster than cabs, and Rapido slowly grew its operations. In 2019, it raised its Series A from Nexus Venture Partners, with participation from other investors like Hero MotoCorp. While Ola and Uber were the leaders in the cabs segment, Rapido quietly grew its bike taxi services, and ended up with a 60 percent market share in the space by 2022. At that point, it was doing over 10 lakh bike rides a day across 120 cities in India, with half its demand coming from Tier 2 and Tier 3 cities.
But bike taxis were a risky business — Rapido’s operations were shut several times in Karnataka, and closed entirely in Maharashtra — so Rapido decided to expand. In late 2020, Rapido launched its auto services, which took on Uber and Ola’s auto offerings. In late 2023, Rapido also ventured into the cabs space, and plans to have its cabs services available in 35 cities by September 2024.
Even as Rapido is treading on Uber and Ola’s toes, like them, it isn’t making any money. Rapido reported a loss of Rs. 675 crore in FY23, and its revenues were just Rs. 443 crore. The company, however, has made its presence in all parts of the mobility space including bike taxis, autos and cabs, and is emerging as a credible rival to the established duopoly of Uber and Ola. The mobility space is also in flux, and newer models, like Namma Yatri’s model of charging subscription services from drivers instead of commissions are being tried out, as are other models like electric cabs from BluSmart or the more premium offering of Shoffr. But even as India’s ride hailing market continues to evolve, Rapido has become the second mobility-based Indian unicorn after Ola, and shown that there might still be room for value to be created in the space.