Venture capital firm Lightbox is in talks to invest in app-based bus commute startup Cityflo, said two people aware of the matter, requesting anonymity.
They said talks for the potential deal are at an advanced stage and it could see Lightbox lead the funding round of about $7-8 million.
Cityflo runs air-conditioned buses in Mumbai for office-goers. It targets densely populated residential and commercial areas.
The company was founded in 2015 by IIT graduates Jerin Venad, Rushabh Shah, Ankit Agrawal and Sankalp Kelshikar. Its investors include VC firms Chiratae Ventures (previously IDG), an early backer, and India Quotient, which acquired IDG’s stake in June 2019. It has raised a total of $750,000 (about ₹5 crore) so far, according to Crunchbase data.
While Cityflo is currently present only in Mumbai, it plans to use the fresh funds to expand its service frequency and fleet size, and also expand to other cities.
“India’s public transport system is broken, severely overstressed, and individual cities have such a potential for scale that you can get big without expanding. So, a more focused bus app with few stops, high user frequency and high-density routes has a big market and will see good investor interest," said the first of the people cited above, requesting anonymity.
Cityflo has an annualized revenue of about ₹20 crore and is close to profitability, said the people cited above.
Cityflo’s CEO Venad did not respond to an email seeking comment while Lightbox’s partner Sandeep Murthy declined to comment.
App-based bus services targeted at working professionals have been rising in India, given an unorganized market and unreliable timings for state-run trains and buses.
Another bus aggregator, Shuttl raised about $40 million in a Series C round from investors such as Toyota Motor Corp. and Amazon India. Bengaluru-based ZipGo also provides similar services, but has shut services in some cities and suspended operations in others, according to media reports.
Lightbox, best known for backing cloud kitchen firm Rebel Foods has been an active early-stage investor, particularly in 2019 when it has been deploying from its third fund of $200 million. Its fresh investments so far from the third fund include hyperlocal delivery and concierge startup Dunzo; Bombay Shirt Company, which makes customised shirts; Generico, which runs a network of offline pharmacies selling generic drugs exclusively and Nua Woman, a sanitary napkin brand.