Electric ride-hailing startup Shoffr, which mostly offers airport taxi services, has raised $1 million through a “user-only” community investment route, which is rare for India.
“This is Shoffr's first fundraise after having bootstrapped for 15 months to 75 cars, profitability, and $1.5+ million ARR with less than Rs 50 lakhs of equity capital…,” Shoffr co-founder Vikas Bardia told Moneycontrol.
The startup would use the funds to expand the team, continuing to grow sustainably and bring the Shoffr experience to more people, he said.
Around 30 percent of the investors are founders themselves who collectively raised more than $2.5 billion, Bardia said in a LinkedIn post on March 20. Around 66 percent of the investors are based in Bengaluru.
Founded in 2022 by Bardia and Kislay Verma, Shoffr entered the ride-hailing space dominated by players such as Ola and Uber. The firm offers a luxury experience with its all-electric offerings and focuses more on customer experience.
Bootstrapped since 2022, the firm has chosen to take the crowdfunding route to raise money, however, the funding is not open to public at large but only to regular users.
Though not common in India, globally, firms like Nothing and Reddit have raised funds through community investment.
In February 2021, Nothing’s founder Carl Pei said that the smartphone firm was open to community investment and sought $1.5 million at the same valuation they got the Series A funding at.
“No company can advertise their raise unless it’s a public offering. However, new structures have evolved in the last few years that effectively allow you to do the same in a compliant manner where rules of private placement must still be adhered to… The key, however, remains in building a user base who loves what you’re building,” Bardia said.
Shoffr’s crowdfunding comes at a time when the Centre has clamped down on this mechanism to raise funds.
In March of 2023, the Ministry of Corporate Affairs (MCA) restricted startups from raising money using fintech platforms that connect businesses with investors. A March 1, 2023 order of the Registrar of Companies (RoC) of NCR said such fund mobilisation violated private placement rules under the Companies Act.
“We've been unconventional in our choices from the beginning — entering a competitive space, using a then-unknown car, spending zero on marketing, and focusing on sustainable growth. How we've structured this fundraise is yet another example,” Bardia wrote in the LinkedIn Post.
Shoffr competes with EV-cab service provider BluSmart, which recently announced that its fleet was 7,000 cars strong. BluSmart operates EVs like Tata Tigor EV, MG ZS EV, BYD E6 which in the mega-cities of Delhi NCR and Bangalore.
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