Ola scouts for bike taxi buyouts

Cab aggregator Ola is looking to acquire bike taxi operators in several cities, according to multiple people directly familiar with the matter, as the SoftBank-backed company aims to quickly expand in a segment that has vast growth potential in India’s traffic-choked cities.

ANI Technologies Pvt. Ltd, which runs Ola, approached Noida-based NOW and Bengaluru-headquartered Rapido—among other bike taxi operators—for a buyout but the discussions have not yielded any results thus far.

India is one of the world’s largest two-wheeler markets and the on-demand bike taxi segment has exploded over the past year. As many as 40 app-based companies are estimated to have started operations in various cities. These include MTaxi, Bikxie, Baxi, TuWheelz and Mobike, besides NOW and Rapido.

Ola’s main rival in the taxi aggregation segment, the US-based Uber Technologies Inc., also operates bike taxi services under uberMOTO in a couple of cities.

However, regulatory framework has not been put in place in many states such as Karnataka, leading to troubles with government authorities. Haryana, where bike taxis are allowed, has around 15 players including Ola and Uber.

Bharat Khandelwal, co-founder and chief operating officer of NOW, said that Ola had held initial talks with the startup. “But there is nothing in it as of now. We are about to close a pre-Series A round from a strategic investor,” he said.

Khandelwal declined to comment when asked about the status of discussions with Ola amid this funding round.

NOW, operated by TapTap Meals Pvt. Ltd, had secured a commitment for $500,000 with immediate disbursal of $200,000 in March.

An Ola spokesperson did not respond to a detailed questionnaire on its plans for the bike taxi segment.

Ola, which is valued at $5 billion and has raised $1.3 billion from investors, is also said to have attracted bikers to join its platform with better incentives.

According to a person familiar with the development, who didn’t wish to be named, about 10 bikers associated with NOW in Faridabad recently moved to the Ola platform in what seemed like an integration move. However, Khandelwal dismissed such a move.

Rapido co-founder Aravind Sanka also said Ola had reached out to the Bengaluru-based startup. “We had some conversations in the past but we have decided to stay independent as we see good prospects,” said Sanka.

The startup raised funding from Hero MotoCorp chairman Pawan Munjal, Google India MD Rajan Anandan and others in April.

Rapido and Gurgaon-based Baxi Taxi are two leading players in the segment; each of them claims to have facilitated 300,000 rides so far. Baxi raised $1.4 million last year.

Ola, which is locked in a tough battle with Uber in the cab aggregation business, has been trying out various transportation services including intercity taxi service, bus transport and three-wheeler booking.

According to people familiar with Ola’s strategy, the company prefers the inorganic route in the bike-hailing service instead of building its own business. A top executive at a bike taxi firm said Ola may even acqui-hire early-stage bike taxi firms.

“Ola’s M&A team has visited offices of a number of bike taxi players,” said the co-founder of another bike taxi service who requested anonymity. “They want entrepreneurs to run their bike taxi business. They understand that it is a market where vertical players with domain knowledge have a distinct advantage.”

Like this report? Sign up for our daily newsletter to get our top reports.