Mobility and ride-hailing startups need not wait for full clarity on the regulatory front. It’s fine if they operate, in the initial stages, in the grey area, if it’s not outright illegal, Kunal Khattar, co-founder of AvantEdge, an early investor in ride-hailing firm, Rapido, told FE.
“Unfortunately, in India, policies move at a much slower pace than technology and product innovation. As a category creator, you will have to operate in the grey at least in the initial stages of your product life cycle. As long as you are not outright illegal, it’s okay. You don’t have to be 100% legal. Policy will hopefully catch up,” Khattar said.
“If we had waited for policy to be enumerated and announced before we launched Rapido, and Zingbus, — I’d still have all my money in the bank, my investors would be starting to call money back and I would have delivered 0% return,” he added.
Khattar said that two-wheeler taxi was a case where awareness was very low and safety concerns were high, but what worked for Rapido was that it focused on using technology to change customer behaviour, instead of waiting for policy changes.
This approach has paid off. The firm currently holds a 1.61% stake in Rapido, valued at Rs 144.4 crore, marking an unrealised return of 27.3x on its investment of Rs 5.4 crore, according to Tracxn. AvantEdge’s journey with Rapido began in 2016, when it invested Rs 1.3 crore in the company’s Series A round, for an 8.2% stake, at a valuation of Rs 16 crore. In 2017, the firm increased its investment by Rs 0.3 crore, raising its stake to 12.2%, as Rapido’s valuation climbed to Rs 48.2 crore. In the most recent Series E round in September, which saw the company entering the unicorn club at a valuation of $1.07 billion, AvantEdge added Rs 3.8 crore.
Khattar said that the ongoing transition from internal combustion engine (ICE) to electric vehicles (EV), will throw up more opportunities for large scale disruption.
