On-Demand Taxi Startup Hailo Raises $30M From USV And Others, Including Strategic Funding From KDDI To Launch In Tokyo

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On-demand taxi service Hailo is looking east. After successful launches in cities throughout Europe and North America, the startup is intent on bringing its e-hail application to Tokyo. To do so, the company has created a Japanese subsidiary, and it’s raised some strategic funding from Japanese telco KDDI, in addition to Union Square Ventures, Richard Branson, and others. The funding plans were previously reported by AllThingsD.

Hailo is one of a growing number of e-hail applications that connect passengers with rides, relying on GPS location to find the nearest driver and in-app mobile payments to facilitate transactions. The startup first launched its service in London in 2011, and has since been slowly adding new markets that it operates in.

In December it announced that it had 10,000 drivers throughout markets around the world, and had served more than a million passengers since launch. Its service is now available in London, Dublin, Boston, Chicago, and Toronto, with plans to expand to more cities soon. Those include New York, Barcelona, Madrid… and now Tokyo.

For that Tokyo launch, the company has planted a stake in the ground by creating a local subsidiary. It’s also raised a bit of strategic money from KDDI, one of the big telecom players in Japan. The strategic part of the deal is important, as the Western startup seeks to gain adoption in its first Asia-Pacific market.

In addition to providing cash, KDDI can help get distribution in the gigantic Tokyo taxi market. The company has more than 36 million mobile subscribers, and can help get the Hailo app pre-installed on at least some of those handsets. On the business side of things, the wireless provider can also provision handsets to taxi drivers, and it would benefit from doing so. In that way, the investment creates a bit of a symbiotic relationship between Hailo and the mobile carrier.

Tokyo is a nearly untapped market when it comes to e-hail apps. According to KDDI senior manager of business development Yasuo Kawabata, the Japanese cab market is the largest in the world, at about 2 trillion yen (or about $22 billion). So far there’s only a few apps for hailing a cab, including one owned by Nihon Kotsu, the largest local taxi service. But that app really only provides a way to call dispatch — it doesn’t have any of the same GPS location or mobile payment features that are common in Western e-hail applications.

While Hailo wants to be big in Japan, it’s also trying to gain a foothold in other important markets — like New York City, where the Taxi and Limousine Commission will soon start running an e-hail trial with a variety of app providers. Key to that trial is integration with the taxi meter system for determining fare and payment.

There’s also increasing competition in various cities around the world for apps looking to offer on-demand rides via mobile apps. In addition to Hailo, taxi-hailing apps like Flywheel (formerly Cabulous) and Taxi Magic are looking to expand into large metro markets in the U.S., including New York. Uber, which pioneered GPS-based location and in-app payments with its black car service, is also going after the low-cost market with taxis and hybrids. And there’s a new generation of ride-sharing e-hail apps like SideCar and Lyft that are expanding from their San Francisco bases to enter new markets.