MUMBAI: Bike taxi startup Rapido is in advanced discussions to close a $50 million round led by domestic investment firm Westbridge Capital and China’s Shunwei Capital, said two people aware of the matter, requesting anonymity.
Existing investor Nexus Venture Partners is also participating in the round, the people said.
The startup will be valued at $200 million post the round, the people added. US’s Skycatchr, AdvantEdge and Astarc Ventures, and Hong Kong-based Integrated Capital are Rapido’s other investors.
The startup had raised $10 million in January in a round led by Nexus and Integrated Capital.
While Nexus and WestBridge declined to comment, Rapido and Shunwei did not respond to mails seeking comment.
Founded by Rishikesh S.R. Pavan Guntupalli and Aravind Sanka in 2015, Rapido operates across 13 cities, primarily in south India, including Bengaluru, Hyderabad and Mysuru, and a few cities in the north and east such as Patna and Bhubaneshwar.
The four-year-old company was banned in Karnataka and Tamil Nadu, owing to a number of issues including the non-possession of commercial vehicle license, insurance for drivers and drivers not wearing helmets.
While the Karnataka state transport department seized 200 Rapido bikes in February, the Madras high court on 18 July banned the firm, until new regulations regarding bike taxis come into place.
The Tamil Nadu government had objected to the services of Rapido as it did not come under the purview of the Motor Vehicles Act.
However, on 2 August, a division bench of the Madras high court stayed the earlier order of the single judge bench, and allowed the company to start operations.
“Rapido is also planning to go deeper into the northern markets and in Tier 2 and 3 cities, where there is significant scope for growth and no regulatory issues," said a third person directly aware of the company’s plans, also requesting anonymity.
Rapido’s fundraise continues an emerging trend where investors are pouring in millions of dollars into startups despite the companies facing regulatory concerns.
Mint had reported on 25 April that investors are taking a long-term view on these issues, and expect them to be addressed.
Indian growth-stage startups are not the first to face these hurdles. Even startups such as Uber, which is a listed company, have constantly battled with regulators across the globe in order to find a middle ground. They have generally looked to capture the market first, and to have an advantage when regulators come knocking.
Shunwei’s investment in Rapido also marks its first deal outside the fintech and content space in India.
Spun-off from the investment arm of mobile phone maker Xiaomi, Shunwei has been one of India’s most active foreign investors at the early and growth stage, although it has so far focused on only a single sector.
The firm has almost exclusively invested in content startups—gaming and social media among others. It has backed companies such as ShareChat, Dailyhunt, Pratilipi and Krazybee.
“The strategy to invest in bike mobility in India follows Shunwei’s strategy in China, where Xiaomi is a major investor in Ofo, China’s leading bike-sharing firm," said the third person cited above.