Home / Companies / Start-ups /  Why investing in scooter startups is a good decision

Through the tumult of the past few decades, one fixture has remained constant on Indian roads—the humble motor scooter. From the elegant Lambrettas of the 1960s that our grandfathers rode, to the spanking new Athers that our children desire, the scooter has remained our favourite mode of transport. With approximately 200 million two-wheelers on road, India is by far the largest market, globally, for motorcycles and scooters. Most middle-class Indians, even those who do not have a scooter, learn how to ride one at an early age. Even car owners prefer to commute by two-wheelers by a factor of 4 to 1. This makes India an ideal market for technology disruption on two-wheelers.

We have just invested in one such company, Vogo, that uses mobile and internet-of-things (IoT) to let you ride a scooter from anywhere to anywhere. Vogo offers a simple service: Use their app to find a scooter near you, ride it to wherever you want, and leave it there for the next customer to use. The service is similar to popular Chinese bicycle-sharing services Ofo and Mobike, except that our roads, traffic, climate and usage habits all favour scooters over bicycles.

The past two decades have seen a massive buildup of public transport infrastructure in our cities. In 2000, Kolkata (formerly Calcutta) was the only Indian city with metro rail. Today, most large Indian cities are rapidly expanding metro networks. While the metro provides good arterial connectivity, there are few solutions for last-mile travel to and from metro stations. As per our user research, 54% of respondents will prefer to use public transport, but don’t, because of lack of first- and last-mile connectivity. Millions of potential public transport users are either adding to the congestion on our roads, or are paying more to get to the station than the cost of the metro ride itself.

A self-drive scooter network can provide an efficient and affordable feeder network, which gets people to and from public transport end-points quickly and inexpensively.

The promise of scooter sharing is not limited to public transport connectivity though. Our research shows that upwards of 80% of our day-to-day travel happens within 3km of our homes. Widely available scooters can significantly reduce the inconvenience of waiting for autos and taxis, or alternatively wading through traffic and finding parking for a personal car.

In our user research, commuters using a wide range of transport options showed high willingness to adopt self-drive scooters. Shared scooters have the opportunity to be India’s most affordable form of motorized transport.

The cost advantage stems from two factors: Higher utilization and self-driving. While our personal scooters stand still for a majority of the day while we are at work, a shared scooter can work all day and do 8-12 daily rides. This means the scooter’s cost is amortized over a larger number of kilometres driven every month, bringing down the cost-per-kilometre drastically.

Unlike with cabs and autos, scooter riders don’t have to pay anyone to drive them to their destinations—self-driving vehicles may be a few years away, but self-driving consumers are here already. As a result, a shared scooter costs less than half of what an autorickshaw does, making them widely accessible for the daily use of most middle-class Indians.

Ritesh Banglani is a partner at Stellaris Venture Partners.

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