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Ola Cabs, founded by two IIT-Bombay graduates -Bhavish Aggarwal and Ankit Bhati

Bhavish Aggarwal and Ankit Bhati, calls itself a technology company and not a cab operator. It claims to be the largest cab aggregator service in the country having started its operations in Mumbai three years ago.

Ola is leveraging technology to revolutionize ground transportation and is aggregating the highly fragmented cab & car rental market – one of the large travel verticals yet to be organized in India. It is our privilege to be associated with the co-founders of Olacabs, who have built a scalable platform for online cab bookings,” said Avnish Bajaj, Co-founder and Managing Director, Matrix India.

Founded in January 2011 by two IIT Bombay alumni Bhavish Aggarwal and Ankit Bhati, Ola has been trying to change the largely fragmented car rental market by integrating technology both at the supply as well as demand side. Through its mobile app, the customers can book available cabs and track their progress until they reach the pickup location. On the supply side, the company analyses GPS/customer travel data and uses algorithms and analytics developed in house, to derive consumable information that is used for inventory management, demand estimation and route planning.

Bhavish Aggarwal, Co-founder and CEO, Olacabs said, “Matrix as a partner has a portfolio of high pedigree investments and rich experience in emerging markets. Combined with the rich global expertise of our existing investor, Tiger Global, this partnership gives us the support and resources to grow rapidly at the pace we intend to. We will continue to create substantial value for our customers in terms of the Ola experience and for our drivers/operators by helping them buy their own cars and improving business for them thereby nurturing micro-entrepreneurship.”

A new breed of transportation startups is using technology to disrupt a highly fragmented taxi service market in India, which has so far been dominated by independent operators and cruising cabs. These startups are vying for a share of the market — estimated to be a $6-billion car rental business — backed by an asset-light business model and heavy use of back-end technology and analytics.

In the organized cab service space, players such as Ola, Meru, Easy Cabs, Taxi-For-Sure and Savaari, among others, are now rivalling the likes of San Francisco-based Uber Cabs, which recently entered India and is operational in Bangalore and Delhi, with Mumbai the next target.

The newer players say what’s working for them is that, unlike Meru — the pioneer of radio cab service culture across urban India and which owns its fleet wholly, the likes of Ola do not own any of the 6,500 cabs that ply on the road with its branding and neither are its 2,000-odd drivers on the company’s payrolls.
Ola CabsWith its latest round of Rs 120 crore in funding from venture capital funds Tiger Global and Matrix Partners India, it is now valued at Rs 500-600 crore. Aggarwal says he competes with all forms of surface transport including auto rickshaws.

The newest competitor is Uber, which is backed by Google Ventures and is one of the most well-funded startups from the Valley, with a valuation of over $3 billion. It only takes bookings through its mobile app and subscribes to a cashless payment model wherein customers are charged automatically on their credit cards once the ride ends.

Ola, on the other hand, gets about 65% of its bookings even today through its customer care centre as these are scheduled rides despite having a spiffy-looking mobile app.

But Aggarwal, the 27-year-old Ludhiana boy, says he does not consider Uber a competitor, at least not until it has an India strategy. “Uber is a western solution to a western problem. Look at e-commerce and compare the success that eBay and Amazon have had to that enjoyed by Flipkart and Snapdeal. Local insights always come in handy, especially for operational businesses,” he adds.

Other international players such as Avis, popular for corporate bookings, have not been able to make a huge dent in the existing cab market. Even Larry Summers-backed Zoom Car, founded by 28-year-old college mates Greg Moran and David Back, which operates on the self-drive model, is still to scale up beyond Bangalore.

Bhavik Rathod, GM – Bangalore, Uber, says the convenience of just tapping the phone and hopping into a car gets addictive, something Uber is banking on to get traction in India. “Accepting credit cards only can be perceived to be restrictive in a market like India, but our numbers suggest otherwise. The demand in Bangalore and Delhi has been phenomenal and we are confident that being cashless is going to work very well in India as well,” Rathod says.

Investors pumping money into this fast-growing sector say the demand for local transportation is limitless, which is where the opportunity lies for VCs. “The cab and car rental market in India is one of the large remaining travel verticals yet to be organized,” says Avnish Bajaj, MD, Matrix Partners India.

And with more cab operators, including the likes of Meru, sprucing their mobile presence, the market is only going to get fiercer for new and old players alike

Updated: June 5, 2014 — 3:09 am
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