BluSmart to cease ride-hailing operations, become fleet partner for Uber
What's the story
Electric ride-hailing start-up BluSmart is planning to exit its core business and become a fleet partner for Uber, according to The Economic Times. The move comes nearly six years after it entered the mobility sector in a similar capacity. Sources familiar with the developments told ET, "BluSmart's shareholders have approved a plan as per which it will begin a transition of the fleet from its platform to Uber over the next few weeks."
Strategy
Transition process and financial challenges
The transition will be done in phases, starting with 700-800 cars. Once the transition is complete, BluSmart will shut down its ride-hailing business. The timeline for this process is being finalized. This strategic pivot comes after the company faced severe financial challenges, burning over ₹20 crore every month.
Financial struggles
Debt crisis impacts funding for BluSmart
The founders of BluSmart, Anmol Singh Jaggi and Puneet Singh Jaggi, who together own over 25% of the company, have been pumping large sums of money into the company. However, with a debt crisis at Gensol Engineering—also promoted by the Jaggi brothers—cash isn't readily available for investment in BluSmart. The start-up had attempted to raise $50 million earlier this year but failed to get any fresh capital from existing investors.
Operational issues
BluSmart's operational challenges and executive departures
The financial woes have also caused delays in salary payments for March, which remain unpaid. This has caused a drastic decline in the number of daily rides on BluSmart's platform, which now clock less than half of the 25,000-30,000 it used to record at its peak last year. Meanwhile, three key executives also recently resigned from their positions in the company.