New Delhi: Olacabs’ holding company, ANI Technologies Pvt. Ltd, is close to raising $40-50 million in its third round of funding, two people close to the deal confirmed, asking not to be identified. The deal is likely to be announced next week, they said.
While existing investors Tiger Global Management Llc and Matrix Partners India are expected to participate in this round, there are at least two new investors on board, one of the two people said.
Bangalore-based Olacabs raised an undisclosed amount in its second round of funding in late 2013 from Matrix Partners and Tiger Global.
Queries sent to Matrix and Tiger Global via email on Tuesday remained unanswered.
The company, which currently operates in nine cities, including Mumbai, Bangalore, Delhi-NCR, Chennai and Pune, plans to expand to Ahmedabad this month.
Founded in January 2011 by two IIT Bombay alumni, Bhavish Aggarwal and Ankit Bhati, Olacabs is one of the country’s largest marketplaces or platforms for car rentals and point-to-point cab services with more than 11,000 cabs on its platform.
This essentially means that while it doesn’t own fleets or offer taxi and cab rental services itself, it serves as a platform for taxi companies.
In February, the company introduced Ola mini, a service that provides small cars to customers at about the same fare as auto rickshaws in three cities—Delhi, Bangalore and Pune. The company plans to expand this service to other cities by the end of this year. Nearly 50% of the bookings for its cabs come through its iPhone and Android mobile app.
Companies such as Olacabs and TaxiForSure operate on an asset-light model where they do not own the vehicles but work as aggregators. Although India’s largest taxi company Meru Cab Co. Pvt. Ltd started out by creating its own fleet of cars, it is gradually moving to a mixed model.
Taxi aggregators enjoy healthy commissions and 20-30% margins, Khan said.
“There is a huge market out there for taxis in India and these companies are raising money to expand their presence across the country,” said Rehan Yar Khan, founder, Orios Venture Partners, one of the leading angel investors in Olacabs. There are 50 million people in India who take about two-three cab rides a day, making it a 100-150 million rides per day, he added.
Olacabs competes with on-demand taxi service companies such as TaxiForSure, Meru Cabs and Mega Cabs in different markets. Aprameya Radhakrishna, co-founder of TaxiForSure, estimated India’s cab market to be worth $3-5 billion, although 93% of it is in the unorganized sector. He declined to comment on Olacabs but added that the market for taxi services is growing at 10-15% annually. TaxiForSure, backed by Accel Partners, Helion Venture Partners and Blume Ventures, raised $4 million in 2013.
The on-demand taxi space is heating up with new players entering the market. San Francisco, US-based Uber launched operations in August 2013 with its high-priced luxury car service, UberBLACK. Late last month, the company announced the launch of its low-cost cab brand UberX in Bangalore, New Delhi and Hyderabad, to directly compete with local rivals such as Meru and, Olacabs and others.
The story has been modified from its original version to reflect a correction.