Pakistan’s Mobility Landscape

Breaking down the buzzword.

Mobility is a buzzword, one that’s been used frequently in the startup ecosystem. But what do we actually mean when we talk about the mobility landscape? Ultimately, Mobility-as-a-Service (MaaS) includes everything from car-sharing, ride-sharing, ride-hailing to food delivery, micro-mobility (e.g, bikes and rickshaws), and other transportation network companies. We have seen a sharp growth in the mobility space globally as new players have entered and executed their innovative strategies to attain their slice of this huge market opportunity. There has been a whopping USD $50 Billion USD invested into ride-hailing startups since 2013. While the market opportunity is enormous worldwide, Asia actually leads the way. In fact, East Asia is expected to remain the largest market globally. The Statista Mobility Market Outlook estimates that this market will grow from USD $56.8 billion to $105 billion and serve some 700 million customers in 2023. But South Asia is not too far behind with a market of USD $30.7 million (see our ‘image of interest’). Let’s look even deeper – at the opportunity in Pakistan.

What is Going on in Pakistan’s Ride Hailing Landscape?

The MaaS (Mobility-as-a-Service) sector in Pakistan, which kicked off in a significant way in 2015 with Careem’s entry into the market, has seen exponential growth ever since (this analysis will focus more on ride hailing & sharing versus food delivery and last mile distribution). Pakistan’s increasing digital consumption has fueled this process, and in 2018, the country was Careem’s second highest source of rides among 14 countries that it operates in. Another ride-hailing service, Shahi Sawari, a ride-hailing startup for rickshaws, launched in 2015, and has since raised seed funding from local investors. Uber, one of the most ubiquitous names in mobility globally, entered the Pakistan market in 2016.  The fierce competition between these two players (Careem and Uber) was a defining moment for Pakistan’s mobility industry (even with the Uber acquisition of Careem in 2019). The Pakistani user base was ready for MaaS players, particularly those that solved for economic and access-related barriers.

A transport industry disruption such as this paved the way for a number of other local and global entrants. In 2016, Bykea, a motorbike-hailing company launched, and has been widely called the “GO-JEK of Pakistan,” leveraging an active network of motorbike owners to transport “people and parcels.” Bykea caters to a lower and middle income segment of the Pakistani population, with a smartphone app in Urdu and voice notes that are leveraged to further facilitate the reach of the company across audiences in the country. (Side note: Bykea was a case study in i2i’s 2019 Pakistan Startup Ecosystem report, which you can read here). In 2019, Bykea announced their $5.7 million Series A round, with both international and local investors participating. 2017 saw two new startups i.e. Roshni Rides and Paxi, enter the mobility space. Roshni Rides was the 2017 recipient of the Hult prize, winning USD $1 million for their startup from this global competition. Roshni Rides and Paxi specifically addresses the mobility barriers for female users in, building a service designed for women (we’ll provide more insights from our interview with Roshni Rides co-founder Gia later in this newsletter). Roamer, an on-demand for car rentals (chauffeur-driven), launched in mid-2018, offering a solution akin to Zoomcar in India.

Disrupting Mass Transit: Airlift & Swvl

MaaS models seeking to disrupt mass transit, however, only emerged in 2019 with the launch of Pakistan-grown startup Airlift (currently operating in Lahore & Karachi) and the entry of the Egyptian company Swvl in the Pakistan market (currently operating in Islamabad, Lahore & Karachi). These startups are well-funded – Airlift announced a $12 million Series A round in November 2019 (Pakistan’s largest Series A round that ushered in international investors like First Round Capital) and Swvl announced plans to invest USD $25 million in Pakistan (interestingly, their announcement came just a day after Airlift’s Series A announcement!).  With their unique (in the context of Pakistan) service, they are targeting consumers from a lower socio-economic strata who would alternatively be using the regular public transport vans. But what does all of this mean for the industry overall? Will the industry ever reach saturation? What type of MaaS models will gain more traction in the future or will prove to be more sticky in the longer run? In this month’s issue, we will summarize some key takeaways from our recent conversations with three mobility startups – Swvl, Airlift, and Roshni Rides – to provide some insights on the industry thus far.

Insights from the Key Players

Our Insights team spoke with Gia Farooqi (CEO – Roshni Rides), Shahzeb Memon (General Manager – Swvl), and Ahmed Ayub (Co-Founder – Airlift) about the recent developments, opportunities, and gaps within Pakistan’s mobility landscape. They unanimously agreed that the mobility problem in Pakistan is big enough for multiple players to solve, especially since there are various addressable markets within the space. This means that all players can have a slice of the market without trampling on one another. If anything, there is a need for collaboration and support within the landscape. They pointed to weak public infrastructure and digital penetration that has paved a way for startups to fill the gap.

Memon (Swvl) and Ayub (Airlift) also spoke about the significance of collaboration with the public sector to ensure the accessibility of their services to the masses. They also pointed to the need for increased awareness about startup activity among policymakers to foster a regulatory environment that supports disruption and innovation within the mobility landscape. However, recent news, which includes a collaboration between Swvl and the Sindh government as well as an MoU signed between Airlift and the Ministry of Science and Technology to introduce the country’s first fleet of electric buses, shows that policymakers are at least taking steps to support innovation in the sector, and even that the support of government is key for scale in this space.

Both Farooqi (Roshni Rides) and Ayub (Airlift) also touched on the importance for investors and policymakers to adapt an inclusivity mindset. Farooqi, who is one of the few female entrepreneurs in the mobility space, noted the challenges in running a startup as a young woman in Pakistan.

A Consumer’s Perspective

We were also interested in the consumer angle in the mobility landscape, particularly as it relates to Airlift and Swvl, and interviewed volunteers who took both services for a week in Karachi, Lahore, and Islamabad. While the sample size is  not representative of the total customer base of these companies, we used the qualitative data gathered from these users to break down the ride-sharing experience. Some of the key areas that our data captured as defining aspects of why users might pick one service over another were convenience (in terms of pick up points, etc.), (lower) cost, quality of experience overall (e.g. this may include driver’s behavior, cleanliness of the car, quality of driving, etc.) and ease of payment. Most users rated Swvl higher on things such as convenience, low cost, and level of comfort with surroundings. Airlift is also viewed favorably by users in terms of convenience and was ranked higher on other aspects such as ease of payment, punctuality, user friendliness, and geographical radius. Essentially, these were things users said were often reasons from them to pick one service over another. However, one thing that we heard consistently from users when weighing both the services against each other was the ease of access to pick up spots offered by each service, and users seemed to find Airlift more accessible than Swvl.

Talking Data

• $771.7 million – amount Careem (a Dubai-based transportation company) raised in funding in 7 rounds, before being acquired by Uber in 2019
• $5.7 million – raised by Bykea in a Series A round earlier this year
• $14.2 million – total amount raised by Airlift in 2019 via a seed funding round of $2.2 million followed by $12 million in October this year.
• $80 million – amount Swvl (an Egypt-based ride-sharing company) raised from 2017 to 2019 in four rounds of funding. The first of these investments amounting to $500,000 back in 2017 was made by Careem. Swvl has allocated $25 million to Pakistan.

The importance of stickiness

In our discussions with Swvl, Airlift, and Roshni, the three entrepreneurs emphasized how customers are at the core of their business. They all agreed that it is critical to build a strong relationship with customers, in order to keep them coming back to their service.

But is there stickiness when it comes to these services? In the case of Pakistan, the digital marketplace – while still not saturated yet – offers consumers with more choices than ever. Companies in the MaaS space have to go the extra mile and build strong brands that integrate their loyalty strategies into every aspect of their business. For instance, Uber is usually identified as a case example of a company that adopts a true end-to-end loyalty strategy that does not just focus on retaining customers but rather offers incentives at different stages of the life cycle of the customer. Similarly with Careem, if you take 15 rides per month you become a Gold member and receive different incentives in return for the points you accumulate. These incentives are reserved for their super loyal customers. Users can earn 10 points for every 20 PKR spent on Careem rides. The points earned can be redeemed to be added to the wallet but can also be used for food, clothing, etc. purchases. While Swvl and Airlift’s user demographic is very different from that of Uber and Careem, similar incentives and reward systems in combination with other aspects discussed above can tremendously help with stickiness in the longer run, though it is important to note how much it can cost to *keep* a customer loyal – and points to why companies like these have to be so well-funded in the first place.

More Insights from us next month, or rather, next year. As always, drop us a line and let us know how we’re doing, things we’re missing, and topics you’d like to see. Until 2020, this is the i2i Insights team signing off!