Tag Archives: Karhoo

How Uber Rival Karhoo Closed For Business

 

Rideshare is becoming widely popular with people all over the world embracing this mode of travelling or commuting. As a pioneer in rideshare, Uber has faced competition from other companies who aim to take on the rideshare giant in different territories. Karhoo was one of such companies. Sometimes these competitors triumphed after a fierce rivalry with Uber. In August 2016, Uber’s former CEO, Travis Kalanick issued a statement on his Facebook page confirming news that Uber’s China Business will be uncharacteristically merging with Didi chuxing, a Chinese ridesharing giant. This was an unprecedented move as Uber is known worldwide for its aggressive territorial stance in countries where it operates.

In March 2018, Uber stated that it will be exiting Southeast Asia and selling its operations in the region to rival Grab. While these are quite shocking, we must note that there are only three instances so far where Uber gave in to competition. Karhoo

Karhoo, founded in 2014 which sought to incentivize drivers by charging 10 percent commission, sadly ceased operations in 2016 citing shortage of funds. It was reported that the company raised about 250 million dollars but blew through the funds. The company is yet to confirm these reports till date. The company issued the following statement below:

“It is with much regret that we have to announce that Karhoo has had to close its service and is now looking at the next steps for the business. The Karhoo staff around the world in London, New York, Singapore and Tel Aviv have, over the past 18-months, worked tirelessly to make Karhoo a success. Many of them have worked unpaid for the last six weeks in an effort to get the business to a better place.

Unfortunately, by the time the new management team took control last week, it was clear that the financial situation was pretty dire, and Karhoo was not able to find a backer. We would like to thank our staff, our partners, the fleets around the world that shared our vision, and the hundreds of thousands of people who downloaded the app and supported what we were trying to do.

The world needs a Karhoo.”

 

What We Think

This doesn’t come as quite a shock. Most startups thrive by taking huge risks which can result in positive or negative growth. This is why we see startups rallying to raise funds from various investors so that these risks have some financial backing and do not end up crippling the company. Uber continues to dominate the rideshare industry after an infusion of funds from various investors. The company is now valued at a whooping $60 billion and counting.

Karhoo’s decision to charge drivers 10 percent commission seemed like a good move at first but with dire consequences. Big companies like Uber and Lyft charge driver 20 – 25 percent commission on each ride. Rideshare companies need money to function and the commission charged off rides is a huge avenue for making back the money expended on growth pursuits.

The news making rounds is that Karhoo is poised to make a comeback after being acquired by financial arm of auto giant, Renault. We look forward to seeing how the company manages this new opportunity to compete again in the rideshare industry.

 

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