Rapido was reportedly raising $100M last fortnight to expand its presence in India, which continued to expand during the election wave. 

Road Less Traveled 

2014 saw the first-ever Big Billion Day sale at Flipkart. 

They had grown swiftly and began to give Amazon a run for their money in India. Naturally, this ensured that they would also attract the best talent. 

Aravind Sanka graduated from IIT Bhubaneshwar in 2012. He had been with Flipkart since then and was part of the logistics team at Ekart. 

At Flipkart, he was deeply involved in expanding Ekart from 10 cities to 100. He showed early signs of leadership as he spearheaded the initiative for the last-mile logistics service at Ekart. 

Aravind’s time at Ekart enabled him to figure out a clear market gap for intracity trucks. Idle times in truck last-mile logistics were as high as 70%. He took this idea to his long-time friend Pavan Guntupalli, as they attended a summer programme in 2014. 

Pavan was a software engineer at Samsung and shared Aravind’s strong desire to start something of their own. They crossed paths with Rishikesh Ramanath, an entrepreneur running his fintech firm right out of college.

The three bonded immediately and were ready to tackle the problem Aravind had brought to them. 

In 2014, TheKarrier was born.  

India was losing over USD 45 Bn a year due to inefficiencies in logistics, driven significantly by the nascent last-mile logistics sector. The major reason for this is technology’s low involvement in last-mile logistics.

The Karrier aimed to provide on-demand logistics for intracity delivery for businesses and individuals. It would work on a marketplace model and earn a percentage of each transaction on the platform. 

In less than a year, they would process over 1,000 orders monthly and oversee a fleet of 300 trucks. In May 2015, they raised USD 234 K to scale the business to multiple cities. 

They would soon realise that they were fighting a losing battle. 

Different from the taxi segment, stakeholders on both sides of the last-mile logistics segment were non-tech savvy and incapable of understanding and dealing with technology. 

This led to difficulties in scaling, and along with the constant credit-availability issues due to the business's nature, they decided to pivot. 

Bangalore’s traffic would provide them with the inspiration they needed. 

Disrupting Rush Hour

Constantly troubled by the rising traffic in the city and unable to easily commute easily from point to point, something had to be done. 

The trio noticed how two-wheelers navigated the city’s traffic comfortably compared to four-wheeled and larger vehicles. 

Most people also preferred their two-wheelers for shorter distances, despite the availability of Ola and Uber. 

However, many didn’t own two-wheelers or felt uncomfortable riding one in the city’s erratic traffic. 

The trio conceptualised a platform to match people needing a ride with experienced two-wheeler riders, creating an easily accessible, more efficient transport system. 

To validate their idea, they conducted surveys to understand potential customers' needs and pilot the service with a few users. With positive signals from the early tests, they built a mobile application that enabled customers to book a ride or “match” with nearby two-wheeler riders, also called “captains”. 

Rapido was launched in November 2015, starting only with a few dozen captains. 

Rapido quickly grew to over 100 captains, and with their customers saving both time and money, they rapidly achieved product market fit. 

As the company grew and entered new markets, Rapido understood that safety would need to be their top priority. 

They had stringent checks and ensured captains completed a comprehensive test ride process before coming on board. This included inspecting the vehicle, verifying documents, and completing mandated training and certification. 

Rapido also leveraged technology to constantly monitor each rider's speed and notify the rider if the rider was speeding. They also installed an SOS button within the app and partnered with leading local ambulance services if needed. 

Within the first six months, by mid-2016, the app had been downloaded over 50,000 times. Their fleet grew to over 400, completing 1.25 Lakh rides, with over 85% of the rides coming from repeat customers. 

Rapido was here to stay, ready to tussle with the big boys.

Odd Even Luck

In 2016, the taxi service market was dominated by giants Ola and Uber.

They were fighting for prominence and growing aggressively. With deep pockets, there was no scope for any new player to take a share of the pie. Most investors had placed their bets on one of the two, convinced that the sector was already accounted for.

Aravind knew the trick of drawing investors’ attention. He realised the need to showcase to investors that the founders had the conviction to ‘make it big’ rather than the idea itself being ‘big’. 

Investors had two strong perceptions about the mobility market in India. 

The first was that the founders didn’t focus on unit economics. The second was that the space was a two-player market run by Ola and Uber.

Aravind saw the loophole here. He played his two trump cards - geography and unit economics. 

Having succeeded in the Bangalore pilot and entering the Delhi market, the team focused on asset utilisation, logistics, and people transport.

The team was also convinced that they were not taking a share of the pie but enlarging it. He identified a huge blue ocean in the Tier II and III cities where online ride-hailing had yet to penetrate.

However, investors were still not convinced of Rapido’s moat. They wanted to see the product evolve.

But Aravind decided to leverage each investor’s call. When he had an impression that the investor liked the idea but wasn’t keen on investing in it, he sought the references of other investors to pitch them. This helped him build a top-of-the-funnel network of investors.

The big breakthrough for Rapido would come in early 2016. 

The Delhi government would introduce the odd-even four-wheeler scheme to reduce pollution levels. This would give a much-needed impetus to ride-sharing, carpooling, and bike taxi services.

As many more bike-pooling apps launched in the capital region to take advantage of the Odd-Even framework, Aravind saw an opportunity to grow Rapido’s customer base. 

During the two-week pilot period of the Odd-Even framework, Rapido ran free rides from the Malviya Nagar and Hauz Khas metro stations in Delhi to boost last-mile connectivity. They also doubled their fleet size for this period, pre-empting the high demand for service during this time. 

Investors slowly grew to comprehend the product's differentiation and gained the conviction that the founders had thought through the product's evolution. 

As competitors NOW and Bikxie raised angel funding rounds in the first quarter of the year, Rapido’s growth and success would see them raise an undisclosed amount in Pre-Series A funding as April ended. 

The bike-taxi sector was taking India for a ride. 

Mobility Riches

India’s taxi market was massive at a large $8B

Yet, it was underpinned by a substandard customer experience. Conventionally, daily commuters had to choose between the hassle-free comfort of owning a car and the low capital expenditure of opting for a taxi.

Uber and Ola identified the customer pain points early on. Leveraging technology, they offered customers comfort with no capital expenditure.

“When a cab is right outside the door, why own a car?” had become a popular global notion.

Riding on increasing digital penetration and a bullish investment climate, Uber and Ola had already positioned themselves as market giants.

Taking a share of their pie was difficult. The founders went back to the drawing board to figure out a plan.

Sub-segmenting the population by income, he identified market insights to narrow down his target market.

The upper-income category never opted for taxi services because they owned a vehicle. The lower-income category did not present a lucrative market because they had lower internet penetration. Aravind focused on the affluent middle income.

A deeper market analysis revealed a white space in the segment. Daily commuters in the Tier 2 and Tier 3 cities were unwilling to spend more to cover the same distance. 

Substituting the luxurious four-wheeler with a cheaper two-wheeler is a viable value proposition.

The bike taxi market in India was estimated to be ~$908 MM in 2019, with a projection to grow to ~$2B by 2028 at a modest CAGR of 10.39%

Targeting this market also enabled employment generation by onboarding Captains on their platform. A huge market disruption opportunity existed. 

The team needed to spread the word about their product.

Highway to Heaven

Meanwhile, Rapido was scaling exponentially. 

Operational revenue jumped 12x from ~INR 80 lakh in FY 2018 to ~INR 10.6 Cr in FY 2019.  Of this, bike taxi services accounted for ~70%, with the remaining 30% earned through delivery services.

The average Rapido ride in 2019 spanned 6 kilometres and cost around ~INR 55. Rapido earned a 20 percent commission on these rides, with the remaining amount going towards the bike ‘captains’, to use Rapido’s terminology for their bike riders.

This meant for an average ride, Rapido would earn around ~INR 11. Given its earnings of around INR ~6.8 Cr from bike taxi services, this would mean that Rapido was facilitating upwards of 61 lakh bike taxi trips a year, or ~17,000 trips a day.  

By FY2020, this number jumped to 100,000 per day. But breakneck growth came at the cost of profitability.

For every ~11 rupees earned on an average ride, Rapido was spending ~31 rupees on marketing expenditures. But more was needed; Rapido had to be a platform in ride-hailers and ride-providers. So it spent another ~16 rupees on incentivising its ‘captains’.

Employee costs added a further ~INR 13 to the bill, with miscellaneous costs such as contracted labourer, infrastructure and software development and payment gateway charges adding another ~11 per ride.

All in all, Rapido spent ~INR 72 rupees per ride to earn ~ INR 10, making a loss of ~INR 62 per ride.  

Aggregating over 61 lakh bike trips a year, plus accounting for the losses attributable to its delivery service, Rapido declared losses of INR 53 Cr in 2019.

But Rapido was chasing economies of scale, by winning growth. 

Between 2019 and 2020, Rapido’s operational revenue jumped ~9x from INR 9.8 Cr to 92 Cr, with losses increasing by a significantly lesser 5x.

Rapido wanted to grow even faster and needed more cash to burn.

Gridlocked Gears

By 2020, Rapido had over 3 Cr downloads, ~INR 1.5 Cr registered users, and 15 lakh drivers across 95 cities. 

What set Rapido apart from Ola and Uber (other than the mode of its transportation) was its key customer base—almost ~50 per cent of its users were coming from Tier II cities and using Rapido for their daily commute needs.

To reduce the switching costs of such users (from buses or metros), Rapido launched a monthly subscription service similar to bus/metro passes, and offered discounts. In just one year, subscription revenue would add ~INR 5 Cr to Rapido’s topline.

It enhanced its application’s offerings with live tracking, easy payments, speed limit tracking, instant grievance redressal and seamless withdrawal of money for its captains (as opposed to weekly payouts).

Rapido was ready to scale rapidly. But then, COVID struck.

And with it came mandatory, countrywide lockdowns, which could spell doom for a business dependent on people going places.  

Rapido had to pivot fast. And that’s where its organised fleet of bikes came to the rescue.

It joined hands with Big Basket and Bigbazaar and eventually even the local governments of Delhi and Bangalore to deliver essential services, ranging from food packets to COVID-19 relief items.

Rapido continued to adapt to the evolving situation and soon started ‘Rapido Local’, a person-to-person delivery service that allows consumers to send and receive food, groceries, and medicines.

It also beefed up its B2B logistics layer, offering ‘Rapido Store’, a person-to-person delivery service for local businesses. And that was not all. It launched a bike rental service in 6 cities and initiated an auto-hiring service in 14 cities.  

As the restrictions ended, it started aggressive performance marketing campaigns to expand operations to 200 cities.

Having successfully survived the pandemic, it raised USD 200 million in a funding round, bringing its valuation to USD 800 million.

The unheralded logistics and mobility startup was knocking at the doors of being a unicorn.

Navigating Through Chaos

Traffic jams are a big headache in India's largest cities. 

In Bengaluru, for example, travelling during rush hour can take 63% longer than usual. It's a story similar to that of Delhi and Mumbai. This is one reason why bike taxis have become so popular. They're a quick, affordable way to travel, especially for short trips like going from a bus stop to a metro station.

However, the pandemic changed the dynamics of the business.

When the pandemic hit, companies like Rapido faced tough times. With fewer people travelling, Rapido had to find new ways to keep going. Since they didn’t own any bikes themselves, they focused on helping their million-plus Captains stay employed. 

They shifted from taxi rides to delivering food and packages, which kept their business alive when rides were down.

During the lockdown, Rapido’s strategic pivot involved utilising its fleet to deliver food and packages. Capitalising on its pre-existing infrastructure, Rapido allowed Captains to toggle between ride-sharing and delivery tasks. This flexibility proved crucial as the core bike-taxi services dwindled.

In 2021, the sector recovered quickly from the pandemic lows, driven by three key external factors.

A significant drop in India’s daily COVID-19 cases in 2021 eased movement restrictions and reduced public travel anxieties. The necessity for transportation among India’s 90% blue- and grey-collar workforce, who cannot work remotely, underscored the need for reliable and safe commute options.

Finally, private operators like Rapido guaranteed higher frequency and better sanitation of their vehicles than public transport, boosting public confidence.

The bike taxi market in India, valued at ~1,000 Cr in 2021, also saw growth from an unexpected quarter: food delivery. Platforms like Swiggy and Zomato, overwhelmed by pandemic-induced demand, turned to Rapido for delivery personnel. 

By mid-2021, business-to-business (B2B) deliveries accounted for 30% of Rapido’s total rides, and the company earned a 5-10% commission on each transaction.

Yet, this growth trajectory wasn’t smooth. 

The sector's expansion brought Rapido into conflict with regulatory bodies. In regions like Karnataka and Maharashtra, legal challenges regarding the legitimacy of app-based auto services have created significant roadblocks. Moreover, protests in states like Maharashtra and Telangana have spotlighted the platform's ongoing regulatory and operational challenges.

It was time to diversify.

Rides the Auto Wave

After the pandemic, many people started to see air-conditioned vehicles with rolled-up windows as less safe due to ventilation concerns. 

Autos, which are open on the sides, naturally allow for more airflow, making them feel safer for passengers concerned about health. This shift in preference has shaped Rapido's business, pushing them to expand their services to include auto-taxis.

In 2022, they launched this service in 25 cities, aiming to expand quickly. This move was not just about diversification but also about increasing the amount they earn from each customer. 

By charging more for auto rides—Rs 14-16 per kilometre compared to Rs 8 for bike taxis—they could increase their overall earnings despite the higher operational costs of autos.

While autos allow Rapido to charge higher rates, the cost per customer goes down because autos can carry more than one passenger at a time. 

This pricing strategy helps increase the Gross Merchandise Value (GMV) and the earnings per ride. This is especially significant in smaller cities (tier-2 and tier-3), where Rapido has used its experience from scaling the bike-taxi model to ensure a steady supply of autos.

Rapido faces stiff competition from established players like Ola and Uber in the auto segment. These companies have deeper pockets and can subsidise their new ventures through profits from other parts of their business, like cabs. 

However, Rapido could leverage its cost management skills or raise funds to compete effectively. It was attacking the premium player’s low-cost segment with an advantage. 

Rapido did both.

Rapido launched Rapido Local and Rapido Store, extending its delivery and logistics services across over 100 cities. These new services aim to tap into the growing demand for quick local deliveries, further diversifying Rapido's revenue streams. This was to help the nascent auto-taxi business.

At the end of 2022, the shift in business strategy started to deliver results.

By mid-2022, Rapido had sustained 60% of the market share in the bike-taxi segment. In the auto-taxi market, they onboarded over 100,000 drivers and completed a million rides across 25 cities. 

Their revenue has nearly doubled yearly, reaching INR 144.77 Crore in FY22, up from INR 75.61 Crore in FY19.

With the successful raise of $180 million in a Series D funding round, Rapido was well-positioned to strengthen and expand its operations further.

The streets might be crowded, but Rapido is making bold moves to ensure they’re not just another player but a leading force to reckon with.

Road to Revolution

Uber and Ola launched bike taxis to rival Rapido. 

Rapido decided to shake things up by announcing its entry to cab taxi services in 2023. However, there was a twist.

Traditionally, companies like Uber and Ola take a 20-25% cut from every ride, making it tough for drivers to earn a good income. 

Rapido's approach is different. For a flat fee of Rs 500 per month, drivers can earn up to Rs 10,000 from rides. This model is cost-effective for drivers and allows them to earn more without worrying about losing a significant percentage of their earnings.

The reason behind this strategy was clear. Get more supply of drivers.

Due to their reliability, Uber and Ola have secured a loyal customer and driver base over the years. For Rapido, directly competing with these giants by traditional means might not be effective. Thus, the subscription model offers a unique alternative, providing new incentives for drivers to join Rapido without the burden of high commission rates.

The new strategy is already promising results in Hyderabad, where Rapido has captured a 23–25% market share in the cab segment shortly after launching. Interestingly, 15% of the drivers who have signed up are new to the cab driving profession, suggesting that Rapido’s model appeals to those previously hesitant to join the ride-sharing economy.

Rapido isn’t stopping with cabs. 

They’re expanding their services to include innovative options like booking metro tickets in Chennai through a partnership with the Open Network for Digital Commerce (ONDC). To integrate their transportation offerings further, they’re also considering adding bus ticketing services in collaboration with Zingbus.

With recent fundraising of $70M and a significant jump in revenue to INR 443 Crore in FY23, Rapido is on a fast track to expansion. The company has acquired 20 million customers and recorded 307 million orders in the last financial year alone, proving its innovative approach is paying off.

India's megacities, where competition is fierce and the demand for reliable transportation is ever-growing, Rapido is making moves that promise to transform the landscape of urban mobility. 

Rapido has effectively become the leader of the low-cost shared mobility market, which will continue to expand. Uber’s India mobility revenue is ~700 Cr, while Rapido is expected to end FY24 with 600 Cr of revenue. It is also close to profitability. 

The company is valued at ~10x of trailing revenue. If it manages to grow at even ~50% each year is ~7.5x of revenue. Uber is globally valued at ~4.5x of revenue, showing Rapido is being priced for growth. 

Rapido has scaled to almost 1.7 million rides daily, reaching 18% of market share in its market. Its existence has always been questioned as the third wheel in India’s mobility market, but it has emerged as a big player in the shadows. 

Rapido’s scale proves that with innovation and insight, even the newest players can redefine an industry. It looks set to emerge as a winner and a key player in India’s shared mobility market.

Writing: Bhoomika, Parth, Raghav, Vishal and Aviral Design: Omkar and Chandra