Bengaluru-based bus aggregator ZipGo is in talks with Essel Group to raise around ₹343 crores ($50million), according to a source familiar with the development. Neither ZipGo or Essel Group has confirmed the development so far. The startup is expected to use the funds to expand its presence to new cities in the country.
This development comes days after another bus aggregator Shuttl had raised ₹75.6 crores from Amazon.
ZipGo was founded by Gaurav Agarwal, Jitender Sharma, Neeraj Paliwal, and Pritesh Gupta in 2015. It provides a platform for affordable and convenient commute option for its users by providing AC buses with the facility of live tracking and cashless payment.
The startup has so far raised $8.6 million from Orios Venture Partners, Omidyar, Ventureast, among others.
After Ola, India’s leading cab aggregator had to shut down its shuttle services this year, facing issues with regulators in Bengaluru, New Delhi and other cities. There is a fresh interest among the investors in the shuttle service providers.
Essel Group is a prominent business house with assets in companies in various sectors including media, entertainment, technology-enabled services, infrastructure and education. It was founded as a commodity trading and export firm in 1926 by Jagannath Goenka with its headquarter in Mumbai. It is currently headed by Subhash Chandra as its Chief Executive Officer.
“Bus aggregators have good metrics and the market is big enough. But the problem is regulation. There’s no grey area even—they are very clearly banned by law. So it’s very risky to fund them. Investors that are putting money into these companies are doing it despite the regulatory risk,” said a partner at a venture capital firm on the condition of anonymity.
With the fresh investment from Essel Group, ZipGo will be looking to strengthen its outreach as it competes with Shuttl and tackles the regulatory issues plaguing the bus aggregator providers.