At the end of October 2018, the Nigerian ride-sharing platform GoMyWay ceased to exist after operating for about 4 years. According to a statement by the company’s CEO Damilola Teidi, this was due to a lack of follow-on funding, as its investors had decided not to continue backing the company.
It was a surprising event, owing to the promise of the business at launch. Within its first month of launch, it announced that it would quickly expand into Ghana, Kenya, and South Africa. A pan-African expansion within launch month is unusual, but the calibre of investors—Konga founder and CEO Sim Shagaya, and Co-Creation Hub (CcHub) and former Amazon and Naspers executive Bill Paladino—on the startup’s capital table somewhat made the possibility considerable. Though the expansion didn’t eventually happen, the prospect of it happening, however, was an indication that the business was meeting its projection.
It’s now 4 years since anybody last used GoMyWay, and another startup is ready to take up the challenge of scaling digital vehicle-pooling in Nigeria. Founded by Laolu Onifade, Hytch Africa was launched to the public last month—after months of public building and teasing its internet community with product videos and pictures—to help people share rides and move faster and cheaper.
Like GoMyWay, Hytch has also begun to ramp up users. The company announced, on its social media platforms, that it had acquired 600 users in just 3 days, with zero spend on marketing. Its CEO also tweeted that they are looking to get 2,000 users by the end of the second quarter.
GoMyWay, before it went into oblivion, had said it had over 12,000 users and had completed 106,630 rides across 16 states in Nigeria. But how the 2 startups acquired users is different. While the defunct company ran free services, accompanied by giveaways, like offering car owners one month’s supply of fuel, Onifade told TechCabal that Hytch hasn’t spent a kobo on user acquisition.
Business model is king
GoMyWay had traction but wasn’t making money. According to Teidi’s statement, the plan by its shareholders and investors was to run a free service for a year or 2, then focus on growing the user base. So, there was traction with zero revenue and no way to monetise the business.
For Hytch, the opposite is the case as they want to make money as they go, and are already doing so. “We are already making money. We charge 15% on every ride and, since launch, we’ve recorded an average of 25 rides daily,” Onifade told TechCabal.
Hytch operates a cashless payment method and it provides an inbuilt wallet for both drivers and riders, and riders are automatically debited at the end of every trip they take.
GoMyWay and others like Ridebliss, another local carpooling service that’ve since failed, are great learning references for Hytch. Hytch, in a bid to capture the vehicle-pooling market, allows not just carpooling, but bus-pooling; buses can pick up people going their way. This means that public bus owners can also use the platform to get riders daily.
“Hytch is not just for private car owners; there is a bus-pooling option as well,” Onifade said.
Ride-sharing is essential
Vehicle-pooling is not new to people: globally, it’s one common way for people to move from one place to another, hitching rides with an unknown driver at random locations or bus stops. What if this same experience can be digitised?
This is the question companies like Hytch are answering.
Different ride-hailing companies are currently trying to incorporate ride-sharing into their product. Last year, Uber in Kenya was reported to be testing Pool Chance, a feature that lets riders heading in the same direction share the cost of the journey. They have plans to roll out the service to Ghana and Nigeria. The company first introduced the service to its San Francisco market, and it was reported to be a success until the pandemic forced its pause.
Another disturbing factor is that the ride-hailing sector—even though it’s not the most-funded tech sector—requires a lot of capital to scale. At least that’s what the top companies have done and made the world believe is best practice: burn heavy cash to acquire users. Bolt recently raised $607 million in a Series F round; Uber raised a total of $25.2 billion over 33 rounds before it IPOed in 2019; and even French BlaBlaCar, which is primarily doing the same thing as Hytch, has raised more than $443 million in venture capital since its founding in 2006 (its recent funding of $115 million came in April last year).
For now, it looks like the company has learnt a great deal from the defunct startups in the sector and may be well on its way to success. But it’s too early to say.
Onifade believes that his company has the skill and drive to build the product and a business model that works but do they have the money needed to fully build? Per investment, the CEO said they have raised a family-and-friends’ round and are currently raising pre-seed.