In a world underneath the cloud of a lethal pandemic, strategic pivots are wanted to outlive within the new regular. As for the ride-sharing firms, one of many worst-hit segments nonetheless struggling to get well from mandated lockdowns and social distancing norms, it was principally about layoffs and pay cuts to cut back their burn charges and maintain operations afloat. Others, like Bounce (registered underneath Depraved Trip Journey Companies), a two-wheeler-sharing startup from Bengaluru, have determined to juggle a number of choices and pivot accordingly to nurture a never-say-die strategy.
Bounce isn’t any stranger to pivots if we care to have a look at its journey and highway map. The idea had its roots in a youngster’s dream of proudly owning a luxurious bike, which he couldn’t afford. Understandably, high-end bikes are by no means pocket-friendly till one opts for rental, relatively than possession, and undertakes brief journeys throughout the metropolis limits. So, in April 2014, Vivekananda Hallekere, the chief govt officer of Bounce, and two different younger cofounders – Anil G and Varun Agni – launched Depraved Trip, an unique bike rental firm. It provided premium bikes throughout storied manufacturers resembling Harley Davidson, Royal Enfield, Triumph-Bonneville, Kawasaki Ninja, Indian Scout and Ducati. By the point it accomplished a 12 months or so, Depraved Trip had already serviced 2,500 rides and even mopped up a seed spherical of $787Ok (INR 5 Cr) in July 2015 from an undisclosed angel investor.
On the time, Hallekere advised Inc42 that the luxurious rental market could possibly be pegged at round INR 3,630 Cr, primarily serving a inhabitants within the age group of 23-39, with a disposable revenue of INR 4.5 Lakh each year.
The primary pivot got here in 2016 as Hallekere and his workforce began a brand new initiative known as Metrobikes. Because the title suggests, it was a scooter rental service for first- and last-mile connectivity with many of the metro stations throughout the town. In February 2018, Metrobikes additionally signed a strategic partnership with Bengaluru Metro Rail Company (BMRCL) to park 65-100 bikes at a number of metro stations. Commuters may both e-book their autos on the spot or use an app to find bikes round these stations. Additionally, Metrobikes needed to shell out a whopping $424Ok (INR 2.75 Cr) per 12 months for renting devoted parking areas.
The posh bike rental service was not discontinued, in fact; In truth, it’s nonetheless operating. However by 2016, the Bounce CEO was much less captivated with luxurious autos and extra focussed on making certain that mobility stays a ‘elementary proper’. It’s a imaginative and prescient he has been promoting to clients and traders for some time now.
However one can not undermine the important motive behind any pivot – a rise in buyer outreach and income. And this was obvious from the corporate’s financials. Throughout its preliminary years of operations (2014-2016) as a luxurious bike rental service, the mum or dad firm solely recorded small income development. However the shift in direction of a mass mannequin since 2018 had seen higher development. For example, the mum or dad agency posted an working income of Rs 1.Four Cr in FY2015-16, adopted by Rs 4.25 Cr in FY2016-17 and Rs 5 Cr in FY2017-18. However by FY2018-19, its revenues tripled, because of the following two pivots.
By August 2018, Metrobikes quietly adopted a dockless bike-sharing mannequin, permitting its customers to select up their autos from anyplace throughout the metropolis limits and drop them likewise. The dockless mannequin was fairly a novelty in India on the time, however the co-founders had been impressed by related developments within the European and the Chinese language markets. Moreover, Bounce launched a keyless scooter-unlocking tech that labored utilizing Bluetooth. This was required as many of the riders used their smartphones to find close by autos (fitted with GPS for simple monitoring).
There have been different advantages of the pivot, together with important development within the variety of rides though bills shot up because the startup needed to deploy extra scooters to fulfill the rising demand. Bounce’s working bills for its bikes alone shot as much as INR 11.6 Cr in FY19 as in opposition to INR 2.12 Cr in FY18. Plus, the price of helmets elevated to INR 1.7 Cr in FY19 from INR 6.89 Lakh in FY18. The corporate additionally noticed a 5.68x improve in its promoting and promotional bills.
In the meantime, enterprise capitalists got here calling to present the corporate an extra increase and see the shared mobility mannequin play out in India. Almost seven months after tying up with the BMRCL, the startup raised $12.2 Mn Collection A, led by Sequoia Capital, and Accel Companions.
By January 2020, Bounce was witnessing incremental development regardless of a major rise in working bills. It was already in 12 cities and cities, the bulk being Tier 2 and Tier Three places in Karnataka, and had deployed 28-30Ok petrol scooters throughout these locations. In Bengaluru alone, the corporate was capable of scale to 90-100Ok rides per day and likewise had round 1,000 electrical autos (EVs) in place for ride-sharing.
The 12 months 2020 was off to a flying begin, because of a $105 Mn (INR 746.33 Cr) Collection D spherical led by Accel Companions and B Capital Group, valuing the startup at round $450 Mn. It was a 2.2X rise from the $200 Mn valuation Bounce had witnessed in the course of the Collection C spherical in June 2019.
The Pandemic And After
Simply as Bounce was preparing for the following part of development, the Covid-19 pandemic swept throughout India (and the world), bringing the city mobility and cab-sharing section to a screeching halt with nearly no motion of individuals. Two-wheeler-sharing startups, together with Bounce, VOGO and Drivezy additionally confronted the identical destiny. Impulsively, round 28Ok Bounce bikes stood silently throughout the 12 cities with out anybody to drive them.
In accordance with a Mint report in July 2020, Bounce started the method of liquidating some 10,000 scooters at second-hand markets. These had been offered at throwaway costs – INR 20,000 for a second-hand Scooty Peps and INR 30,000 for a used Honda Activa. Its closest rival VOGO additionally began hiving off its autos in use, the report added.
Hallekere confirmed with Inc42 that the startup did have over 25,000 autos earlier than March 2020, however needed to liquidate greater than 50% of those autos as a consequence of diminishing demand. Nonetheless, the mobility startup later launched brief and long run rental choices after the nationwide lockdown in March, which in line with Hallekere served sure part of the general public, and for emergency use.
“Not restricted to supply firms, this (lengthy and brief time period rental) service was additionally availed by most people who wanted to maneuver round, together with paramedics and COVID warriors. We see a great demand even right this moment, as over 6,000 autos are presently used underneath the brief and long run rental plans,” Hallekere provides.
In accordance with Ashish Sharma, managing director of the VC agency Innoven Capital, city mobility startups resembling Bounce, VOGO, Drivezy and others had been on a high-growth trajectory simply earlier than the lockdown in March, they usually had been principally targeted on elevating capital and growing provide of bikes on the highway. Therefore, many of those startups had already began buying scooter belongings earlier than the demand peaked because it takes time to get the autos, assemble and model them, match them with monitoring units and eventually deploy.
“When the demand fell to near-zero (after the lockdown), firms had no different possibility however to promote them. Two-wheelers are depreciating belongings, so if they aren’t getting utilized, it is sensible to promote a few of them,” he provides.
Bounce has raised round $12 Mn in debt financing from Innoven Capital.
Lots of the scooters operated by the likes of Bounce and VOGO are sometimes financed by way of debt capital and thru financial institution loans. So, every single day an asset lies unused, the excellent debt retains mounting within the absence of any income.
However after the nationwide lockdown imposed in March, it was fairly clear that demand can be practically zero for the following 12-15 months and two-wheeler rental startups discovered themselves in a scenario the place the variety of autos deployed was excess of the demand on the market.
The Ultimate Pivot: Will EV Play Come To Bounce’s Rescue?
Though the scenario seemed grim for the shared mobility trade, an individual with direct information of the startup’s operations says that the corporate has arrange a separate EV workforce as early as Might to give you a pivot-and-persist technique that might increase its dwindling enterprise. The particular person has spoken on situation of anonymity as he’s not authorised to speak to the media.
“The workforce began constructing the software program and back-end capabilities, in addition to the remainder of the infrastructure required to get a self-assembled EV. Additionally it is growing a provide chain for assembling EVs from scratch and holding talks with EV part makers in China, South Korea and Europe,” says the Bounce supply quoted above.
The particular person additional provides that within the later months of lockdowns, the corporate’s choice to liquidate its petrol autos has paid off as this cash is getting used to check and assemble its first retrofitted low-speed electrical scooter. Moreover, Bounce has leased or rented some 5,000 bikes to meals supply firms, e-commerce companies and logistics gamers who want autos within the face of rising residence supply calls for as a consequence of pandemic restrictions. The B2B rental technique has helped the corporate earn some income and meet a part of the operational prices because it gears up for a brand new chapter.
In accordance with some specialists, Bounce’s newest pivot shouldn’t be thought of a last-ditch try to survive. For one, the corporate has already labored with EVs even in its bike-sharing avatar and is conscious of the economics and the working mannequin round it. However does it make it an appropriate candidate for a full-fledged EV play?
This can be a pertinent query because the EV house is getting too crowded too quick. For example, VOGO, the closest competitor of Bounce and likewise hailing from Bengaluru, desires to give you an EV fleet to make sure sustainable mobility. However in contrast to Bounce, which intends to hold out in-house assembling, VOGO will merely buy the EVs from producers at wholesale pricing.
One motive for startups to avoid EV growth could possibly be the excessive capital expenditure on this house, says VOGO co-founder and CEO, Anand Ayyadurai. Even then, the working expenditure of an EV is now 70-80% lower than its petrol counterpart. Add to that a number of tax cuts (particularly the 5% GST on EVs in comparison with 28% tax slapped on petrol autos) and the subsidies provided by the central and numerous state governments, and it’ll clarify the sudden EV rush seen throughout city mobility startups.
On the flip facet, there’s a price benefit. Trade specialists agree that by selecting to assemble an EV, Bounce would basically have 20% extra margins per journey because it doesn’t must bear important capex spend for the outright buy of an EV from a producer.
EV Is Capital-Intensive, However The place Is The Cash?
As mentioned earlier than, the opex benefit of an EV is sort of important, particularly when an organization like Bounce is making an attempt to pivot for restoration and development. In accordance with a number of trade specialists and traders, the working expense of a two-wheeler EV on a shared mobility mannequin run by the likes of Bounce and VOGO would add as much as INR 0.60-0.80p per km. However for a petroleum car working on the identical mannequin, the opex shall be INR 3-Four per km, together with the upkeep of the car. However despite its confirmed price benefit, the ground-level challenges have to be addressed first.
Take, for example, the battery charging choices and the mannequin that ought to work greatest in a rustic like India. As of now, the one sensible resolution is a swappable battery system, however no standardisation has occurred on this space. Consequently, a battery that works on a Bounce scooter will not be appropriate with a VOGO two-wheeler. This implies in contrast to petrol autos, startups like Bounce and VOGO should rely on a big workforce on the bottom to assist swap empty batteries with new ones at swapping stations. Worse nonetheless, these stations might must be arrange by the businesses themselves, which shall be a further price.
However each traders and founders assume these challenges may be overcome, and shared mobility startups can bounce again by way of EV proliferation.
“The important thing challenges (for the adoption of EVs) have been the supply of high-quality, sturdy autos and the charging infrastructure for batteries. Some items of the puzzle – getting vehicle-financing at scale, for instance – are but to be absolutely solved. However there may be sufficient confidence for launching a considerable EV fleet with a 30-40% decrease complete price than a petroleum fleet,” says Ritesh Banglani, Accomplice at Stellaris Enterprise Companions.
Anurag Ramadasan, principal at 3one4 Capital, is sceptical. “The unit economics within the EV house might sound engaging and cheaper than a petroleum car in Tier 1 cities. However it’s nonetheless unclear if related economics may be retained in different geographies,” he says.
“The case for (car) sharing is weaker outdoors of metros as a result of common possession of a car tends to be greater in such cities, and the demand may be a bit decrease. There may be a whole lot of floor nonetheless to be lined within the metros earlier than any of those firms must discover past them,” Ramadasan provides.
One factor is obvious, although. Sourcing EVs, both from producers or by way of self-assembly (a la Bounce) and making them as accessible and purposeful as right this moment’s mainstream Uber-Ola fleet shall be robust and require enough funding. Bounce’s realisation of an ideal future the place EVs may be noticed zooming round on Indian roads may, certainly, be a tall order.
However there’s a silver lining. What Bounce is aiming to perform right this moment, has been executed by one other startup from the identical metropolis.
Since its launch in 2018, Bengaluru-based Yulu has caught to self-assembled, low-speed EVs for its bike-sharing fleet. The startup presently operates in six cities, together with Delhi, Mumbai, Ahmedabad, Bengaluru, Pune and Bhubaneswar, has an EV fleet of 1,800 on the bottom and raised round $19 Mn, together with an $eight Mn spherical from Bajaj Auto, which is presently serving to it assemble EVs domestically.
Its journey was not simple. Initially, Yulu was importing fully-made autos however quickly shifted to a mannequin the place it was self-assembling scooters domestically. However later in 2019 it additionally began to fabricate some elements domestically by way of a tie-up with Bajaj Auto, says Amit Gupta, CEO of Yulu.
“When you’re importing a very developed EV or car to India, it attracts customs obligation, which makes issues unaffordable. So, we began importing every part and did the assembling ourselves,” says Gupta.
The Bounce supply quoted earlier within the article has advised Inc42 the startup additionally has plans to transform its whole fleet to EVs by the tip of 2021 and have round 10Ok EVs on the highway. However it means Bounce should begin in search of giant investments to start out assembling its personal EVs within the nation. Plus, it should go scouting for an OEM associate for creating a sturdy provide chain for its autos.
“The largest and speedy areas of focus for EV (sharing) firms right this moment can be procuring higher debt traces to finance extra autos. On this house, the next density community results in a greater utilisation charge. So, it is very important penetrate micro markets extra effectively,” says Ramadasan of 3one4 Capital.
Bounce has its work reduce out to make its newest pivot profitable. How briskly it could possibly adapt and achieve will decide how properly it could possibly play the EV mobility sport.
