SoftBank is closely evaluating the mobility sector in India, including the two-wheeler mobility space, multiple people familiar with the matter told ET, as the Japanese investment powerhouse scouts for the next phase of innovation after ride hailing.
After dominating investments in the ride hailing space globally with bets on market leaders Uber, Grab, Didi Chuxing and Ola, the firm has made inroads into upcoming segments like rentals, autonomous driving and even asset management firms globally, a trend that could also play out in the India market, these people said.
In India, which is the largest two-wheeler market in the world, SoftBank’s move beyond ride-hailing could be a bet on the emerging two-wheeler rentals business. ET has learnt that the Japanese firm has had engagements with companies such as Bounce, Vogo and Drivezy, though no investment plans are in the pipeline yet.
SoftBank’s interest in the new mobility space can be gauged through its two investments in peer-to-peer car rental service Getaround and vehicle leasing platform Fair, both in the US. SoftBank invested $300 million in Getaround in August last year, followed by leading a $385 million investment in Fair in December.
A SoftBank spokesperson declined to comment on specific investment plans, but said the company was focused on ride-hailing as a sector and was interested in future technologies in the area.
Still in its infancy, the scooter rentals businesses allow users to pick up scooters from designated pickup points throughout the city and drop them at any other designated point at the end of the ride. This process is completely automated – the scooters are equipped with hardware to allow auto lock and unlock through an app, remote tracking of vehicles and remote diagnostics of the status of the scooter.
These companies are looking to disrupt first- and last-mile connectivity and hold a lot of promise, but have yet to expand across India and prove out unit economics of the business, a metric that investors said SoftBank and other large investors are closely tracking, which has played out in US and China.
“While the model works in Bengaluru, there are questions around how conducive the climate will be in other top cities in India to scale up,” said an investor in one of these scooter rental companies. “Also, unit economics is yet to be proven. Even at the density these businesses have in Bengaluru, the losses are unsustainable,” he added. All three major players in the space are largely based in Bengaluru and a few surrounding cities, and plan to move into new markets only later this year.
Peer-to-peer car leasing platforms such as Zoomcar, Revv and Drivezy have existed for some time now, but owing to market dynamics in India they’ve not scaled as quickly as expected.
Instead, short-term intra city scooter rides have emerged as a fast-growing business, with the sector already clocking over 100,000 rides a day, largely in Bengaluru.
That is still 35 times smaller than the number of rides cab hailing businesses such as Ola and Uber, both backed by SoftBank, do in India on any given day. However, considering scooter sharing has been around for under a year and the opportunity becomes apparent.
Still, it’s far too soon for a large player like SoftBank to make a play in this space.
“Considering the average cheque size of SoftBank’s investments, there’s no room for them yet in this space,” said an entrepreneur building a scooter sharing firm who has engaged with the investment fund.
While the investment may still be some time away, Bounce and Vogo are likely to hit the market in the next few weeks to raise at least one more round of investment from external investors, and battle to establish market leadership, a person familiar with the matter told ET.
“While Bounce plans to raise about $150-200 million, Vogo plans to raise around $50 million because their assets are partly financed by Ola,” he said.
