Bykea announces venturing into car ride-hailing

Pakistan's bike ride-sharing and delivery startup Bykea is expanding its product offering with a step into the car ride-hailing service, the company announced on its official LinkedIn account on Friday.

Earlier this week, it had teased a launch of the BykeaCar service with a separate social media post.

The development is set to further intensify competition in the space where a number of players are currently going through a volatile ride due to high prices of vehicles and fuel.

An official, well-versed with the workings of the car-hailing space, suggested Bykea will look to compete on price-points, "at least in the beginning".

In June, Bykea had announced that it secured $10 million in fresh funding from its existing backers, as the company looked to enhance its service offerings including "leveraging its fleet of over 60,000 driver partners for unique fintech use cases like cash on delivery (COD), cash-pickup, or verification services".

The funding was led by investors including Prosus Ventures, MEVP, Sarmayacar, Tharros, and Ithaca Capital, said the company statement.

Back then, Bykea said it plans to use the capital to enhance and extend its offerings in mobility and fulfillment services for consumers and SMEs, including food and e-commerce deliveries as well.

Bykea, according to the company, is the largest on-demand platform by transaction count in Pakistan, and has seen exponential growth in the three cities in which it operates – Karachi, Lahore, and Islamabad – in the last two years.

"It runs on the rails of a network of motorbikes serving transport and delivery services for 40 million citizens in urban Pakistan," said the company in its fund-raising announcement in June.

A volatile ride for the startup sector

Pakistan's startup sector has been witnessing a volatile ride recently with fundraising announcements coming in tandem with downsizing and closing down of operations.

In June, Swvl announced it is suspending its intra-city services “in light of the global economic downturn” while Airlift in May said it's cutting its global headcount by 31%.

Logistics startup Truck It In also announced layoffs after securing $13 million in funding.

Later, VavaCars – backed by Dutch energy and commodity trading company Vitol – also said that it has shut down operations in Pakistan, while Careem suspended its food delivery business as well. More recently, CarFirst, a Lahore-based startup, also announced shutdown of its operations across the country.

In a recent interview with Business Recorder, Aman Nasir, partner at Venture Capital (VC) firm Sarmayacar that is one of the investors in Bykea, said “things got a little bit carried away over the last one or two years” due to which venture capital funds will now will be a bit wary of who they fund.

“Ideas that were perhaps not so credible that in the heights of last year got funded … that won’t happen anymore,” he told Business Recorder in a recent interview in Lahore.

“There’s a lot more diligence being done, a lot more realism returning to the market, which may not be a bad thing.”

He believes that with a huge youth population and smartphone penetration, all sectors will move to digital first, which means there is plenty of potential for startups especially in spaces like fintech, health tech and B2B ecommerce.