Deal focus: Vogo pursues transformation on two wheels

impact investor Lightstone Aspada helped raise $19 million for India’s Vogo, a scooter rental start-up that offers commuters last-mile travel options in Bengaluru, Hyderabad, Mangaluru and Mysore. The fundraise occurred nearly a month after Bounce, a similar startup, raised five times as much capital.

“Vogo has already raised capital from a number of private equity investors and it has a large commitment in bike leases from Ola. Leasing is fundamentally more economical in the long run,” says Varun Gupta, director for digital and technology investment banking at Avendus Capital, Vogo’s financial advisor for the transaction.

Unlike Bounce, Vogo only operates docked bikes – users must return bikes to specific points throughout the city whereas Bounce users can drop off vehicles wherever they please in Bengaluru and Hyderabad. Bounce wants to own its fleet and hires personnel to retrieve the bikes. The company is a lot more stretched from an operational point of view as it also offers long-term scooter rentals across 35 cities.

Vogo’s keen focus on solving just mobility-related concerns helped win Lightstone Aspada’s support after a six-month search for additional investment. It’s a sector earmarked for rapid growth if India’s existing transport infrastructure doesn’t improve. According to the UN, India’s urban population will nearly double between 2018 and 2050, with the addition of 416 million urban dwellers.

Despite rising incomes, though, vehicle ownership remains low. Existing public transport providers cannot handle the load, leading to growth opportunities for shared mobility service providers like Vogo. Ride-hailing platforms such as Ola and Uber also play a part, as do motorbike taxi providers, but they fail to provide a competitive alternative to public transport options for individuals with lower incomes.

While Bounce decided to use previous funds to expand its presence nationwide – after all, its former avatar was as a bike rental start-up – Vogo rolled out shared mobility services in smaller cities like Mangaluru where private buses run chartered routes instead of government departments. Given that private operators follow well-traversed routes, it’s difficult for individuals living in remote locations to get on the transport grid.

“We actually find users using it for the full trip - from their home to the office or somewhere else. Tier two, tier three cities present a larger opportunity and the results we have seen are quite promising,” adds Gupta.

He estimates that 100 million commuter trips are up for grabs in 13 cities. Bounce is expected to continue focusing on major metropolitan hubs as it prioritizes electrification of its fleet, but Vogo’s expansion plans are likely to involve ensuring smaller cities don’t get left behind in the technology-enabled upgrade of India’s transport sector. At least one impact investor has been convinced of the goal.

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• Topics
• South Asia
• Early-stage
• Technology
• India
• Transportation
• TMT
• LGT Capital Partners
• LGT Lightstone Aspada