Karhoo crashes after six months after takeover talks collapse
Taxi comparison and booking app Karhoo is shutting down after only six months in operation, and just weeks after it claimed to have overtaken Uber as London’s leading taxi app.
The closure of the company comes after the failure of an attempt to raise further capital from a private investor to stop it from going into administration. Staff have already been made redundant, as the Karhoo app has stopped functioning.
It is unclear whether administrators have been appointed or not, in which case the assets could be snapped up by a rival app provider.
In a statement, Karhoo announced:
“It is with much regret that we have to announce that Karhoo has had to close its service and is now looking at the next steps for the business.
“The Karhoo staff around the world in London, New York, Singapore and Tel Aviv have, over the past 18-months, worked tirelessly to make Karhoo a success. Many of them have worked unpaid for the last six weeks in an effort to get the business to a better place.
“Unfortunately, by the time the new management team took control last week, it was clear that the financial situation was pretty dire, and Karhoo was not able to find a backer.
“We would like to thank our staff, our partners, the fleets around the world that shared our vision, and the hundreds of thousands of people who downloaded the app and supported what we were trying to do.
“The world needs a Karhoo.”
Karhoo staged an advertising takeover of Waterloo Station as part of a high-profile London launch in May
Karhoo launched in London on May 9, and has since been rolled out into a number of other UK cities including Manchester, Birmingham and Leicester. It offered a similar click-and-hail functionality to Uber, but worked with established private hire fleets rather than individual drivers, and offered a number of extra features, including price comparison and the ability to pre-book.
Some of the biggest London operators signed up, including Addison Lee, Keen Group, GLH, Swiss Cottage Cars and eConnect Cars, as well as black cab operator ComCab.
In October, Karhoo revealed figures for its first three months of operation in London. It claimed to have more cars in the capital than any other cab app, including Uber, and a weekly turnover of £750,000. The app was processing up to 7,000 bookings a day, Karhoo said.
Inventory had risen to 33,000 cars in London and 110,000 across the UK. More than 140,000 UK users have downloaded the app and registered.
Founder Daniel Ishag launched Karhoo with a flourish, claiming: “We are levelling the playing field for hundreds of thousands of licensed drivers through our fleet partnerships and giving them the chance to fight back while at the same time offering customers more choice. We are giving hundreds of thousands of Davids the power and platform to take on Goliath.”
Ishag told Professional Driver in April that Karhoo was “a natural evolution of the Uber system” and said Karhoo would be “spending millions and millions of pounds on marketing” in a bid to compete with the US-based app. But the initial funding appears to have run out, leaving Karhoo unable to pay suppliers and staff.
According to reports, Karhoo staff received a memo last week explaining that a new backer was in talks to save the business. But the memo said the potential backer had sought “reassurances about the state of the business, as he is being asked to invest money today with no due diligence done”, the memo said.
Karhoo told the staff terms were “very close to being acceptable”, though “a new hoop was thrown in the way” and this seems to have derailed the deal, despite a pledge by members of Karhoo’s management to put $600,000 of their own money into the business.
Operators will be devastated by the collapse. Some London firms said Karhoo had been a lifeline in the battle with Uber. Nadeem Khan, who runs Cascade Cars in Wimbledon, said in October: “We were seeing a lot of our jobs go to Uber, but now they are coming back to us through Karhoo. The difference is that Karhoo is helping the industry while others are trying to take it over.”
And Nicholas Monteith, owner of private hire firm Mornington Cars, said: “Without doubt, Karhoo is a lifesaver for the classic, licensed minicab driver. It will help protect the minicab industry and allow us to fight back, bringing us jobs that we would otherwise not have been able to access, giving us the chance of more work while giving consumers more choice. It allows us properly to compete.”