Auto rickshaws have been a staple in Indian cities for decades. Now a company called Jugnoo wants to make it easy to hail them on smartphones. The Chandigarh-based startup just received $5 million Series A led by Snow Leopard, with participation from mobile commerce firm Paytm and several returning investors from its angel round.
Jugnoo’s business model is unique because it is tackling transportation and on-demand delivery at the same time. Founder Samar Singla hopes his company’s double-pronged approach will set it apart from other auto rickshaw apps like mGaadi and PoochO, as well as Uber and Ola, both of which recently added the three-wheeled vehicles to their services.
The app currently operates in four cities (Chandigarh, Ludhiana, Amritsar, Jaipur) with plans to expand to Gurgaon next. Jugnoo claims 150,000 users and handles about 3,000 transactions each day, making about $4,000 in daily revenue.
Almost immediately after Jugnoo launched in November, the company noticed that many people were hailing auto rickshaws not for rides, but to deliver and pick up items.
To keep up, it launched two new services—Jugnoo Meals and Jugnoo Fatafat, which focus on restaurant orders and on-demand deliveries from local stores, respectively.
Both are important sources of revenue for Jugnoo since it wants to keep ride fares low for its cost-conscious user base and avoid surge pricing. Logistics currently accounts for 30 percent of the company’s transactions, but its goal is to boost that number to 50 percent.
Auto rickshaws are popular in India because they are inexpensive and easy to maneuver through crowded streets, but can still be loaded with more goods than a bicycle or scooter. Before Jugnoo and other apps came along, Singla says customers would either hail the vehicles by the side of the street or at stands. Depending on their location and traffic conditions, however, people might have to walk a mile or so before they finally find an available vehicle.
A former physicist, Singla was working at his previous startup, Juggernaut, which makes on-demand apps for businesses, when he realized there is a need for instant hailing of auto rickshaws.
Like other transportation and hyperlocal delivery apps, Jugnoo uses a heat map to manage supply and demand. While Uber and Ola are both targeting rapid growth in India, Singla believes Jugnoo will be able to set itself apart by offering a better value proposition for drivers and repeat customers.
“Drivers because they want to work with a company that is focuses on auto rickshaws instead of using them as a backup,” says Singla. “There are ten times more auto rickshaws in India so we can handle supply and demand much better. People who want the quickest and cheapest means to get from point A to point B will choose us, but if a person wants an air-conditioned car he or she will probably go for an Uber.”
On the logistics side, Singla identifies hyperlocal grocery delivery services Grofers and Peppertap as its main competitors, but says Jugnoo’s auto rickshaw network is usually able to fulfill faster deliveries, most of which take less than 40 minutes.
As the company expands, it plans to add three-way chats to Jugnoo Fatafat between users, vendors, and customer support, as well as a mobile point-of-sale system. Singla says Jugnoo’s goal is to provide its merchants with communication tools, seamless payments, and delivery logistics, all of which the company plans to build itself.