Taxi Driver Online

Taxi groups unite to fight Uber with $250m start-up

An unexpected new combatant is set to join the taxi app wars: a 10-month-old start-up has raised $250m, with plans to raise more than $1bn, in an ambitious attempt to take on Uber. Karhoo, a little-known group founded by a British entrepreneur and based in New York, said it will launch its taxi comparison app in January next year with the support of several high-profile partnerships and backers.

The service will open in London, New York and Singapore after securing a network of 200,000 cars by striking deals with local taxi and minicab fleet owners. This includes partnerships with Addison Lee, the UK’s largest minicab group; Comcab, the London black cab operator; New York private hire firms Carmel and Dial 7; and 10,000 yellow and green cab drivers in the city. Karhoo is working on further deals to expand into more cities in the coming months.

The newcomer is the latest challenger in a fiercely competitive market, with rival taxi app groups also building formidable war chests to fund their expansion plans. Sources familiar with the matter said Karhoo has raised about $250m so far. The company said it is in talks with “several parties to raise in excess of $300m and we expect this to rise to more than $1bn in around 18 months time”.

Declared financial backers include David Kowitz, co-founder of Indus Capital Partners, the US hedge fund; Jonathan Feuer, managing partner at CVC Capital Partners, the European private equity group; and Nick Gatfield, former chairman and chief executive of Sony Music Entertainment, the record label. Eric Daniels, the former chief executive of Lloyds Banking Group, is a board director at the company.

Despite this backing, Karhoo faces an uphill struggle against the established competition. Uber has raised $10bn, allowing it to expand quickly worldwide, while offering price cuts that have attracted millions of customers.

Uber’s main US competitor, San Francisco-based Lyft, has raised $1bn. Hailo, a UK group that has raised $100m, pulled out of North America last year, saying it could not be profitable due to pricing squeeze created by Uber and Lyft.

In Europe, Israeli group Gett has raised around $220m and has made inroads into key cities including London and Moscow. Earlier this month, Madrid-based Cabify secured $12m in investment from Rakuten, Japan’s largest ecommerce company by sales, to fuel a push into Latin America. The dominant Chinese player, Didi Kuaidi, has raised almost $4.5bn, while India’s Ola has raised close to $1bn.

But Karhoo’s chief executive and founder Daniel Ishag said: “[Uber] can’t subsidise prices forever; they have to be profitable, especially if they want to IPO. We can go in and we can level the playing field.”

Mr Ishag, 41, is a serial entrepreneur. In 2007, the London-born businessman founded Bluewater Bio, a water treatment company. In 2000, aged 26, he co-founded eSpotting, the online advising company which was sold in 2003 for about £100m. He added that by working with licensed taxi companies, Karhoo will avoid the regulatory troubles that have hampered other groups such as Uber. “We’re able to work in markets where the peer-to-peer networks aren’t allowed to work, simply because we empowered the incumbents,” he said.

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IDFIMH

Uber are established this lot has to convince punters they are a good alternative it is not about how much money you raise from investors it is about convincing the general public you are the best

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lack of modern legislation is the iceberg sinking the titanic of the transport sector

Who?????

The problem I see is that the market for drivers will be flooded by these competing sharks and there simply won't be enough cars, drivers or indeed punters for their perceived demand.

How is that a problem ?

It's all about Reliability, established co-ops like we have in Edinburgh will be hard to beat

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Alway's been about Tightening the Grip!

I wish you luck Reggie, but I still think you're in for a shock when they storm in, they'll throw millions at a city in free rides to gain a foothold. Loyal customers suddenly forget when someone offers them £20, £49, £50 worth of free rides.

We weather it in London, we have a daytime population of 16 million, many business users, I just hope Edinburgh has a sufficient customer base.

The whole uber thing is about cheap rides and free credit, nothing to do with technology, apps and all the other smokescreens that are put up.

I think you are right on the nail. My own thoughts are that drivers will initially exude to all and sundry what a wonderful company they are! Well that will be until they realise that they are working twice as much to earn what they were earning before. They will then drift back to previous companies, causing a shortage of drivers for Uber. Customers having experienced price surges, will now experience them on a regular basis due to a shortage of cabs - people and their money in rural/semi rural areas do not have money in abundance will then drift back. The bottom line being is that Uber will not survive in small Cities/towns/villages.

To counteract Uber's freebies, other companies have only to do the same/similar immediately after the Uber promotion has finished, and hey ho back to square one.

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Common sense........is just not that Common.

How is this the same as über

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Note to self: Just because it pops into my head does NOT mean it should come out of my mouth!!