Chalo raises $40 million to digitize bus commutes in India

More than a decade ago, Mohit Dubey founded CarWale, a startup that allows people to sell and buy used and new cars. But spending more than 10 years with the startup made Dubey realize that he was solving problems for just 3% of India. He wanted to try something bigger. Literally.

His current venture is Chalo, which helps bus operators accept digital payments and enables commute tracking. India’s bus market is a $20 billion opportunity, almost twice the size of cabs, but there are very few buses in the country, he told TechCrunch in an interview.

“Unfortunately, [the bus space] has not seen any tech disruption or meaningful service improvements,” said Manish Kheterpal, partner of WaterBridge Ventures, one of the earliest backers of Chalo. “Chalo’s unique solution is positively impacting the lives of daily commuters across 11 states of India and is poised to expand its offering nationwide.”

There are just three buses for every 10,000 people in India. It’s a space that is ripe for disruption, but also one that remains largely underserved. Customers still have to pay their fare in cash. Very few buses offer monthly passes. And there is no certainty when any of these buses will arrive at their designated stops.

These are the challenges seven-year-old Chalo is solving. It deploys GPS machines on buses, which allows customers to track the whereabouts of their commute. Its eponymous app sells tickets and monthly passes, helping these operators secure recurring revenue.

“It’s a massive opportunity,” said Dubey, adding that digitizing bus commutes is also an enormous challenge. Bus owners often don’t know how much collections they made in a day. The ticketing system needs to also work in offline mode and still accept online payments as buses zip through areas where there is little to no connectivity.

Chalo, which is a Hindi word for ‘let’s go’, is now beginning to gain traction on all fronts.

Image Credits: Chalo

On Tuesday, Chalo announced it has raised $40 million in its Series C funding round. The round was led by Lightrock India and Filter Capital. Existing investors WaterBridge Ventures, Raine Venture Partners, Neeraj Arora (former chief business officer of WhatsApp) and Amit Singhal (former SVP at Google) also participated in the round.

Dubey said the startup was operating about 1,900 buses before the pandemic hit last year. Now the startup is operating 2,500 buses and has signed up several thousand more. By December, he said about 8,000 buses will be live on the platform. “Very rarely you find a business opportunity that also has a societal impact,” he said.

“Buses are India’s number one form of public transport, with 48% share of trips. Despite this, the experience is broken. At Chalo, we deploy technology that significantly improves the bus experience, and thereby increases ridership. We are today one of India’s largest mobility companies, with 20 million happy rides each month,” he said.

As part of the new financing round, the startup said it will use $10 million of the proceeds to buy back stock options to reward its current and former employees as well as some early angel investors.

“Chalo has emerged as a clear winner post-COVID by addressing the under-served public transport segment. This positions them to be the de-facto mobility operating system of the country. Public transport is the backbone to build a larger mobility platform addressing mobility needs at scale,” said Vaidhehi Ravindran, partner of Lightrock, in a statement.

“We are impressed by the founding team’s innovative, and technology led approach combined with a deep sense of purpose to serve the society. Their empathy towards stakeholders codified into the business at every level makes them the right team to build this solution for the Indian public. We are excited to partner with Chalo as they continue to transform Indian mobility.”