Troubled Ride-Hailing Startup Karhoo Bought by Renault UnitBy
Carmaker’s financing division RCI beats out other bids
Karhoo closed down in November after running out of money
Karhoo Inc., a ride-hailing service that shut down and dismissed its staff in November after running out of money, was bought out of administration by a group backed by car maker Renault SA, reviving an effort to take on Uber Technologies Inc.
RCI Banque SA, an automotive finance group owned by Renault, said it beat out 40 bidders for Karhoo and will revive the service, a smartphone app for comparing prices from various non-Uber taxi services. A price wasn’t disclosed.
Karhoo, which had its headquarters in New York and an operational base in the U.K., attracted attention in the startup world as a would-be Uber rival after media reports that it had raised $250 million. In fact, the company had raised only about $40 million and was struggling to generate revenue or raise the additional funds needed keep the business going, internal documents showed. Attempts to lure customers turned into costly problems, including giving away promotion codes that mistakenly didn’t expire, meaning people kept using them for free rides.
By November, Karhoo was out of money. Many employees and business partners weren’t paid and Chief Executive Officer Daniel Ishag departed.
Two Karhoo employees who had attempted to keep the company afloat, Boris Pilichowski and Nicolas Andine, are now becoming co-CEOs of the company, which said it aims to relaunch its services sometime this year.
Renault becomes the latest car manufacturer to back a ride-hailing service. Toyota Motor Corp. has invested in Uber, General Motors Co. has backed its rival Lyft and Volkswagen AG put money into Gett. Meanwhile, BMW co-owns the car-sharing service DriveNow, which allows people to use a smartphone app to find cars near them to rent.
— With assistance by David Hellier