India's Ola acquires TaxiForSure; pressure is on for Uber

Thus it has begun - the consolidation of taxi-hailing companies after the sudden mushrooming of the service in major cities in recent yea...

Thus it has begun - the consolidation of taxi-hailing companies after the sudden mushrooming of the service in major cities in recent years. Following last month’s announcement of the merger of China’s Didi Dache and Kuaidi Dache, India’s Ola has announced that it has purchased its smaller competitor, TaxiForSure, for US$200 million.

Ola claims to have 100,000 vehicles in its fleet across 67 cities, while TaxiForSure has a purported 15,000 vehicles in 47 cities. The acquisition, which had been industry speculation for a while, will increase Ola’s already wide reach in the country and cement its position as the industry leader in India, although the companies will remain separate entities for now.

While things are developing for Ola at an accelerated pace, its competitor Uber has been suffering from stunted growth following a series of serious setbacks in India recently, including allegations of rape, vehicular manslaughter and assault against their drivers which gained wide international media coverage. In what appeared like an act of desperation, Uber recently slashed fares by as much as 40% across the 11 Indian cities in which it operates. However, the new Ola-TaxiForSure merger will surely leave Uber straggling behind it, while also nudging out other India-based rivals like Meru Cabs.

Both Ola and TaxiForSure are Bangalore-based companies, but have complementary features which, according to Ola, the acquisition will take advantage of:

Ola uses a network of driver-entrepreneurs; it doesn’t own any of the taxi’s nor employ any of the drivers, which are instead provided by a third party. TaxiForSure, on the other hand, works with taxi operators and focuses on the lower end of the service, offering the services of the Nano for instance and base fares that start from 49 rupees (that’s less than US$1).

The acquisition involved a group of global venture capitalists: Ola is backed by Softbank, Tiger Global and Sequoia Capital while TaxiForSure has investors that include Accel Partners and Bessemer Ventures. Interestingly, Softbank is also an investor of Kuaidi Dache, and is also a major stakeholder of GrabTaxi, the Southeast Asia’s equivalent of these fast growing taxi-hailing apps and a main rival of Uber in the region.

Is it our imagination or does it appear like a concerted effort by the industry players to destroy Uber?

images: Forbes

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