Ixigo-Backed Bus Startup Raises $10.5 Million - India Report

15.08.2024 - 13:42 / skift.com / Bulbul Dhawan

Electric digital intercity bus startup Fresh Bus has raised INR 875 million ($10.5 million) in its Series A funding round. FreshBus, which offers ticketing, real-time tracking of buses, loyalty program, among other services, was founded by Sudhakar Reddy Chirra. Chirra had built bus aggregator Abhibus which was acquired by Ixigo in August 2021 in a cash and stock deal.

Fresh Bus secured an investment of INR 160 million ($1.9 million) from Indian OTA Ixigo in its first seed funding round last year.

Proud to announce @ixigo's ₹26 crore investment into FreshBus with a vision to build India's leading green transportation biz for inter-city bus travel with next generation long-range EV buses. @rajnishkumar & I are backing @SudhakarAbhiBus once more for his next venture (1/n) pic.twitter.com/vX1CkDSN8A

The company has a fleet of 20 electric buses and operates on two routes: Bangalore-Tirupati and Hyderabad-Vijayawada. Fresh Bus aims to use the funding to expand its route network by adding 15 new routes and expanding its fleet by launching 150 e-buses soon.

“We expect to scale to 1,000 electric buses pan-India over the next four years, generate skilled employment opportunities, and offer a green alternative for mass road transportation,” said Sudhakar Chirra, founder and CEO.

Why it Matters: The bus industry in India is expected to be valued at INR 1,040 billion ($12.4 billion) by 2026 at an annual growth rate of 6.64%, according to a report by Internet and Mobile Association of India (IAMAI) and Grant Thornton Bharat released this year. 

A report from travel consultancy firm Videc revealed that ground transport is the driving force behind India’s online travel market, with the rail and intercity bus categories accounting for 30% of the total market. 

The intercity bus market is set to increase 21%, to $1.9 billion from 2023 to 2026.

With a majority of Indians staying in secondary and tertiary regions and the middle class playing a more prominent role in the travel ecosystem, bus services are important in facilitating their movement to domestic and international destinations. 

In its first bus industry report, online bus ticketing platform RedBus said that two-thirds of the online bus ticket bookings in India came from the non-metro regions. It added that as many as 8,530 towns in India are connected by buses with 364,000 unique bus routes. 

Multiple Indian OTAs have partnered with online bus ticketing platforms – MakeMyTrip has partnered with RedBus, EasemyTrip with YOLOBus, and Ixigo with Abhibus.

With enhanced road infrastructure through creation of expressways, bus journeys are expected to become more convenient. 

The funding for the Fresh Bus points towards the positive investor sentiment on the