Karhoo

What did it do?

Karhoo was a comparison service that brought together the vehicles of London's licensed taxi and private hire firms in a single app, letting users choose by price, arrival time or vehicle type. The company promised operators that it would take a 10 per cent commission instead of Uber's 20 to 25 per cent cut.

Why did it shut down?

Founded by Daniel Ishag in 2014, the company launched in London in May 2016 and also built teams in New York, Singapore and Tel Aviv. Although the press reported that it had raised USD 250 million, Ishag later said the amount raised was USD 52 million, while Taxi Times reported a figure of USD 39 million as of September 2016. Spending on rapid expansion burned through the cash before any revenue materialised, and employees worked unpaid for the final six weeks. On 8 November 2016 the company announced it had failed to find new investment; administrators were appointed the next day, leaving debts of around USD 30 million. In January 2017 a vehicle backed by RCI Bank and Services, Renault's finance arm, acquired the assets and relaunched Karhoo as a business platform, but in May 2024 it was announced that the business was no longer financially viable and the company went into administration again.

The story

Karhoo was a taxi comparison start-up founded in London in 2014 by entrepreneur Daniel Ishag. The idea was simple: users would see black cabs and private hire firms in a single app and choose by price, arrival time or vehicle type. By promising to take only a 10 per cent commission from operators, Karhoo hoped to win driver companies over to its side against Uber. Deals were signed with London operators such as Addison Lee and ComCab.

The app went live in London in May 2016; a trial began in New York, and teams were set up in Singapore and Tel Aviv. The press reported that the company had raised USD 250 million and aimed to raise USD 1 billion in total. The real picture, however, was different. Ishag later said the amount raised was USD 52 million, while Taxi Times wrote that the figure as of September 2016 was USD 39 million.

Less than six months after launch, the coffers were empty. Employees worked unpaid for the final six weeks, and Ishag stepped down as CEO a few days before the collapse. On 8 November 2016 the company announced it had been unable to raise money, and the next day administrators from David Rubin and Partners were appointed. Employees in London, New York, Singapore and Tel Aviv lost their jobs, and debts of around USD 30 million were left behind.

The story did not end there. In January 2017 a vehicle backed by RCI Bank and Services, Renault's finance arm, bought Karhoo's assets. Karhoo stopped being a consumer app and became a business platform providing ride-booking infrastructure to rail and airline companies, and was later placed under Mobilize, Renault's mobility brand. Seven years later, in May 2024, it was announced that the business was no longer financially viable, and the company went into administration for a second time. Karhoo shows that an overhyped start-up story and a big company's rescue operation can end in exactly the same way.

Lessons for founders

• Announcing inflated funding figures attracts attention in the short term, but once the real picture emerges it destroys investor and employee trust at the first crisis.
• Building teams on several continents before unit economics are proven in a single market multiplies costs before revenue arrives.
• The backing of a powerful corporate owner does not bring sustainability on its own; under Renault's wing Karhoo again failed to find a profitable model and closed for a second time.

Sources

1. Uber rival Karhoo shuts down after blowing through a reported $250M in funding (TechCrunch, 2016-11-08)
2. Whatever happened to Karhoo? (Taxi Times, 2016-11-15)
3. Renault calls in administrators for 'not financially viable' Karhoo (Professional Driver Magazine, 2024-05-16)

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