ZipGo likely to scoop up $50 Mn from Essel Group.
India’s online bus aggregation space suddenly seems to have burst into life. Barely days after Gurugram based Shuttl raised $11million from Amazon and other investors, now its competitor ZipGo has joined the fundraising talks. If reports are to believed, the Bengaluru headquartered bus aggregator player is in talks to raise nearly $50 million from Essel Group.
Some top sources also claimed that the fundraising deal has already been signed between the two and this development will be made official in coming weeks. However, ZipGo and Essel Group have so far not commented on these unconfirmed reports.
ZipGo boarded the journey into India’s nascent bus aggregation space in 2015. Its founders Gaurav Agarwal, Jitender Kumar and Pritesh Gupta boarded the journey with the hopes that it will disrupt the space same way as Uber and Ola has done it in the cab hailing market.
According to reports, the startup has so far raised $8.6 million from Orios Venture Partners, Omidyar, Ventureast and other investors.
Meanwhile, Essel Group is no stranger in India’s corporate world. The group, which has interests in media, entertainment & logistics, is owned by business tycoon Subhash Chandra. He is widely considered as one of India’s self-made billionaires.
Bus aggregation space hampered by regulatory issues
Many analysts have been taken by surprise by Investor’s sudden interest in the bus aggregation space. Their surprise is owing to the fact that bus commutation in India is heavily regulated by government rules and regulations. These rules and regulations have even led to the exit of cab hailing giant Ola, after the company was recently forced to shut down its shuttle services in several cities due to regulatory issues.
In fact, incumbent players ZipGo and Shuttl have also been victims of regulatory issues as tough rules forced them to quit a few promising markets.
Analysts claim that investors are putting money in bus aggregation space with the hope that regulatory issues will improve once the bus sharing market will become as big as cab hailing market.
The hopes that bus aggregation market becoming as big as cab hailing is not entirely misplaced, given the fact that even today most Indians travel by bus than by cabs. However, apart from regulatory issues, the incumbent players may need also need to find perfect business model for long term business stability.
