Ola and TaxiForSure share a ride

However, the taxi market is highly fragmented. Riteshi Bangali, a partner with Helion Venture Partners estimates that only 3% of the market is organized with an average fleet size of only around five cars.

"The utilization of taxis is already low - about 40% - so consumers have typically struggled to find taxis when they needed them. We thought it was an ideal market for a technology-enabled aggregator," says Bangali. "Happily for us that is exactly how the market has played out."

Launched in 2011, TaxiForSure was one of the first start-ups - along with Ola and US-based Uber - to offer a mobile app platform in the taxi market. Helion put in $500,000 as part of a seed stage investment alongside Accel Partners and Blume Ventures. Three years, and three rounds later, TaxiForSure has been bought by Ola for in a $200 million cash and equity deal.

Rather than exit, Helion has acquired a stake in a combined entity that comprises TaxiForSure's 15,000 taxis across 47 cities with Ola's 70,000 taxis and 30,000 auto rickshaws across 85 cities. The companies generated revenue of INR 420 million and INR5.1 billon, respectively, in the 2014 financial year.

Aprameya Radhakrishna, co-founder of TaxiForSure, tells AVCJ that the deal means that not only does Uber have a larger domestic competitor to contend with, but also better capital efficiency. "Winning market share in the current environment of intense rivalry calls for burning disproportionate amounts of cash," he says. "The same growth can be achieved with a lower burn if the two domestic aggregators - TaxiForSure and Ola - could get together and unlock the inherent synergies."

TaxiForSure will continue to operate as a separate entity, in part because the companies complement each other through a fundamental difference on the supply side. Where Ola works directly with taxi drivers, TaxiForSure works with smaller taxi operators. "It made a lot of sense to put the two pools of supply together, it gives the combined company access to both these sources of supply," says Bangali.

He estimates the combined entity is now around 10 times the size of Uber India in terms of rides, making it by far the largest player in the space. No one expects Uber to give up market share without a fight, but it now faces a heavyweight rival.

"There are a lot of synergies which are working well for both the brands, we think we can work together to further revolutionize personal transportation in India," says Radhakrishna. "The combined entity will be strong enough to fight the bigger and better capitalized, foreign players in this space."

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• Topics
• South Asia
• Venture
• Technology
• Consumer
• TMT
• Consumer
• M&A
• Venture
• India
• Transportation
• Helion Ventures
• Accel Partners
• Blume Ventures