Karhoo, a relatively new company that aimed to compete with Uber’s car sharing service has officially announced that it has shut down. The UK-based company, which aimed to create a service that would pull together prices and offers from Uber competitors into one single app, seemed to have a unique idea when it first launched but, even after significant funding, the company has failed to become a success.
Since Karhoo was founded, the company has held a number of fundraising rounds but has never disclosed the full amount it raised, though it’s claimed that a minimum of $250 million was invested into the company. Now, although the company has received huge amounts of money, it wasn’t enough to keep the company afloat any longer. Looking at the company’s statistics before the shutdown, it seemed like there was hope for the company when it came to competing with Uber. After all, Karhoo had a network of over 200,000 cars in London, thanks to its partnerships with the likes of ComCab and Addison Lee. As well as this, the company was also in the first stages of starting network testing in New York, where the company had a much smaller fleet of 10,000 cars thanks to its partners Carmel.
For those wondering how the company actually earned money, considering none of the vehicles were actually owned by Karhoo, the company based its revenue off of a 10% commission rate it took from each ride booked through its own app, a significant advantage over Uber’s 20-25% commission rate it currently charges drivers through their app. Now, although from a driver’s point of view it would be much better for riders to use the Karhoo app versus Uber’s one, for Karhoo itself, the lower commission rate definitely didn’t help its financial situation, due to the high amounts of money needed to expand the business. Charging such a low rate of commission would really only be viable if a large enough amount of people were using the service, something that wasn’t the case. With such ambitious plans by Karhoo, Uber is sure to be pleased that it has managed to fight off yet another new competitor and, with things showing no sign of slowing down for Uber, it remains to be seen when a true Uber competitor will come to market and shake up the market.