Rapido, Ola-Uber rival, plans new fintech subsidiary: Report

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Rapido, the Bengaluru-based ride-hailing startup, is planning to enter the fintech sector by launching a new fintech subsidiary focused on lending and other financial services. This move follows Rapido’s reported interest in the food delivery sector, indicating a broader strategy to diversify beyond ride-hailing. The fintech unit will function independently, allowing Rapido to create new revenue streams amid growing competition and regulatory challenges in its core business. The company has previously explored financial products such as insurance, retirement investments, peer-to-peer lending, and vehicle financing, making fintech a natural extension of its existing ecosystem. Rapido’s pivot comes at a time when regulatory hurdles, such as Karnataka’s suspension of bike taxis, threaten its core mobility business. By expanding into financial services, Rapido aims to strengthen its position in the gig economy while tapping into new growth opportunities.

1. Understanding Rapido’s Business Model

1.1 How Rapido Operates

Rapido, founded in 2015, operates as a ride-hailing platform offering two-wheeler and three-wheeler taxi services. Unlike Ola and Uber, which focus heavily on four-wheelers, Rapido has carved a niche in the budget-friendly transport sector, making it a go-to choice for daily commuters.

1.2 Revenue Model

Rapido generates revenue through commission-based earnings, charging a percentage on each ride booked via its platform. Additionally, it has been testing new revenue models, such as subscription plans for frequent riders and fleet leasing for drivers.

1.3 Funding and Growth

The company has secured multiple funding rounds, including a $230 million investment from Prosus and WestBridge Capital in 2023. This funding has allowed Rapido to expand its operations, invest in technology, and explore new business verticals like food delivery and fintech.

2. Rapido’s Foray into Fintech

2.1 Why Fintech?

The decision to launch a fintech subsidiary is strategic, considering Rapido’s existing network of drivers who require financial solutions such as vehicle loans, insurance, and savings plans.

2.2 Key Focus Areas

1. Lending Services – Offering loans to drivers for vehicle purchases and upgrades.
2. Insurance Products – Providing customized insurance plans for drivers and gig workers.
3. Peer-to-Peer Lending – Facilitating loans between individuals.
4. Investment Options – Introducing savings and investment schemes for gig workers.
5. EV Leasing – Expanding into electric vehicle financing and leasing.

2.3 Rapido’s Advantage in Fintech

With a large base of drivers and customers, Rapido can leverage its data to offer tailored financial products. This move aligns with its goal of ensuring financial stability for gig workers, many of whom struggle with access to credit.

3. Challenges and Opportunities

3.1 Regulatory Hurdles

The Karnataka High Court’s recent order suspending bike taxis poses a significant challenge. Similar bans in Maharashtra and Delhi have already impacted Rapido’s operations, making diversification critical for survival.

3.2 Competitive Landscape

Rapido is entering a fintech market by launching new fintech subsidiary dominated by established players like Paytm, PhonePe, and BharatPe. However, its deep integration with the gig economy gives it an edge in offering specialized financial solutions.

4. Learning for Startups and Entrepreneurs

4.1 Diversification is Key

Startups must explore new revenue streams to remain resilient against regulatory changes and market competition.

4.2 Leveraging Existing Customer Base

Rapido’s fintech move highlights the importance of using existing networks to enter new industries with minimal acquisition costs.

4.3 Data-Driven Decision Making

Companies with access to customer and driver data can create tailored financial products, giving them a competitive edge.

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When it comes to tracking industry trends, The Startups News provides deep insights into emerging business models, funding updates, and strategic expansions like Rapido’s move into fintech. Stay ahead with expert-driven news and startup analysis at thestartupsnews.com.