Micromobility: A mode to combat traffic woes

The daily commute in Indian cities means grappling with perpetual congestion and traffic snarls, and a huge dearth of public transport facilities offering last mile connectivity. If you like many others use public transport, there is a dearth of options to get you home from the nearest bus, train or metro station. This lack of adequate options is what seems to be driving a lot of interest and investments into a clutch of micromobility startups.

What does it mean?

Micro-mobility is essentially defined as small transportation modes propelled by humans or electric motors with speed in the range below 50 km/hour. A report by data analytics firm, Traxn compiled by the World Resources Institute shows that about 500 startups in the micro mobility space in India have raised nearly $600 million over the course of this year. Since December, companies such as Vogo, Rapido, and Bounce among others have raised more than $100 million about from marquee investors, including Sequioa Capital, Kalari Capital and many others, including investments by individuals such as Flipkart founder Sachin Bansal. The Vogo collaboration with ride-sharing platform Ola last year offered the company about $100 million, with the first trance of around $2.5 million being released recently. Rapido has raised about $10 million in their Series A round last month and Bounce is closing in on an $80 million funding by Maverick Capital, Falcon Edge, and many others.

Why is it gaining traction?

Prashant Sharma, an IT professional does not own a vehicle and commutes almost 20 kilometres every day. “I have to walk almost 2 kilometres from my house to the point of commute. Recently, these dockless bikes have meant that I no longer have to worry about walking every day. Most of them are electric and that makes them eco-friendly as well.”

Speaking about their investment in Vogo in their India report that was published recently, Kalari capital stated, “As India’s economy begins to mature, there are categories that are moving away from ownership to access and convenience. Mobility is one such category, where consumers have started to appreciate the benefits that shared transportation offers. While a cab user spends Rs 12 to Rs 14 per kilometre, bike rentals will reduce the cost considerably.”

Many analysts feel that the rise in micro-mobility options will enable new modes of transport to emerge and disrupt the existing system. Sudeept Maiti, senior Manager – Integrated Transport, Sustainable Cities, World Resources Institute India said, “The combination of technology, data and entrepreneurship are enabling new modes and service delivery models. This is making new mobility options available to more users. With close to 571 startups listed in this space, mobility startups are going to metamorphose urban transport in Indian cities.”

This is a sentiment that finds resonance with Murali T, partner and leader, innovation and startups, PwC India. He pointed out, “Micro-mobility in India offers a solution to an important pain point. With our narrow roads and other factors, including low vehicle ownership, public transport is not able to solve the connectivity issues. Micro-mobility startups help in offering ready-made solutions. It is a model that is priced adequately and is bound to find takers, as state-backed transportation options are not able to scale at a pace that the cities are urbanising. Government regulation must keep pace with these new age startups.”

Though Bounce did not reveal details about their latest funding round, Varun Agni, CTO, and Co-founder spoke about the growing market for micro-mobility platforms. He maintains that with only 18% of Indians having access to owned mobility, there is a huge market for these companies.

“The two-wheeler based shared mobility is currently a $4.5 billion market, with a latent growth possibility. The prospects for this industry, therefore, is attracting innovation, technologies, and resources from all stakeholders, including investors.”

He added, “We believe that mobility is a fundamental need and that India, unlike many developing countries, will transform into a shared mobility economy, skipping the owned mobility stage. Our objective is to play a catalyst to this transformation by democratising commute. Currently, in Bengaluru, Bounce operates with more than 5000 bikes and undertakes approximately 26,000 rides per day. We are working towards increasing bike density in Bangalore and hitting the mark of completing 100,000 rides a day.”

These sentiments are echoed by Anand Ayyadurai, co-founder of Vogo. He points out, “Our cities are very congested and face plenty of traffic snarls. Since most of the commute in Indian cities is in the micromobility space, i.e. under 10 kilometres, scooter sharing is an affordable alternative. We have seen a lot of customer interest and have seen bookings jump up 10x in the past few months.”

From an investor point of view, a clearly visible road to profitability is the key factor driving capital into this sector. Sreyas Shibulal, founder and director of Micelio, a firm that manages a seed fund for electric vehicles and micro-mobility startup states, “A couple of years ago, when many micro-mobility startups began operations, investors were watchful. They were waiting to see if this model would have the potential to scale and find takers. That has clearly happened, mainly because of the issues these startups resolve. The investors are seeing a path to profitability and this has resulted in more capital flowing in. The fact that many of these startups have made the human effort in their machines minimal, has meant they are finding more and more customers as well.”

What does the future hold?

Vivek Durai, founder of business intelligence platform Paper.vc is very optimistic about the future of micromobility in India. “In India, most innovations happen to solve pain points created on account of bad infrastructure and related issues. Over the next three years, these companies plan on having anywhere between 100,000 and 200,000 bikes. That will bring a huge change in the way India commutes. It may also bring changes in the way we purchase vehicles.”

Analysts tracking the sector are confident that owing to low vehicle ownership, and lack of adequate public transportation would mean that micromobility would continue to remain a major player.