Startup Circle: How is Chalo redefining mobility access in India?

Indian public transport, although wide and large, hasn't been exactly the best. Crowded buses, untimely routes and buying ticket physically, are some inconveniences that people are tired of. But, with changing time, and evolving technology, the sector is also changing. Here's where Chalo comes into play. Chalo is a bus transport management startup that uses tech to bring efficiency in the intra-bus services.

They offer live tracking of public transport and cashless payments for transport in India. The startup recently also introduced mobile ticketing technology for any operator. Which means, any private or govt operator can install the software and enable mobile tickets for their routes. In conversation with CiOL, Vinayak Bhavnani, CTO and Co-founder, Chalo talks about how the startup is redefining the mobility sector.

1. What is Chalo about? Tell us about the team.

Chalo is a technology-driven transport-solutions company that aims to make travel by public transport better. Our company’s core purpose is to “make travel better for everyone”. The Chalo app has implemented its integrated journey planner in 30 cities across India. We offer live tracking of public transport and cashless payments for transport in India. Today, Chalo is the preferred partner of many smart cities in the country. We help them in their mission to increase the adoption of public transport among the residents.

Mohit, Priya, and Dhruv, the other three co-founders of Chalo, have worked together previously to build CarWale.com and BikeWale.com, India’s #1 car and two-wheelers portals. Through this journey, they had witnessed first-hand some of the problems that increasing private vehicle ownership was causing. I, Vinayak, graduated from IIT Delhi and was previously a software engineer at Direct-i. I have always been passionate about improving public transport and hence Chalo was the perfect place to make that possible.

2. How did you come up with the idea?

The core purpose of starting Chalo has been to ‘use technology to improve public transportation in India’.

When Mohit and I met in December 2013, his thought process on why commute is not so great in so many countries including India, and how technology can help address this appealed to me. First, one could see the high rate of urbanisation and the daily struggle with road traffic because of the increase in personal vehicles. Second, even though the use of technology was steadily increasing in India, public transport systems seemed far behind in adopting the technology.

We invested the Initial years, in building the app and the entire underlying technology platform to provide a seamless end to end journey planning and live tracking for city buses. Over time, we have also added a full-fledged Automatic Fare Collection System (AFCS) and the entire payments stack to our offering. We are now unique in the sense that we are perhaps one of the few companies in the world that can offer the entire public transport technology stack - from live tracking to operations, to in-bus ticketing, mobile tickets, and a common mobility travel card.

3. How do you monetise?

Chalo works in partnership with operators to increase the bus ridership and charges a revenue share of the increased collection that arises thereof. Chalo’s business is based on a simple premise – that buses are highly underutilised in India today. With the right technology and improved operations, ridership can increase significantly – in some cases as much as by 2x.

A typical city bus in India costs around Rs. 6,500 - 7,000 daily to operate when it runs approx. 200 km. Today these buses are largely running on a break-even scenario. With Chalo’s technology, the ridership and revenue in these buses will rise 50%-100%. Therefore, Chalo invests in the entire technology requirement upfront and works with operators on a revenue share when ridership increases above previous levels.

4. What is your business/market growth?

In absolute terms, we measure our success in terms of the number of cities as well as the percentage increase in passenger traffic in the cities that we are present in. We are currently operational in 30 cities and have been adding one city every month on an average.

The first step to start operations in any city is to get in-principle approval of the bus operator associations and/or the state transport undertaking. Post which, we start establishing partnerships with the bus operators in the city to implement our technology solutions. This includes- live bus tracking, the entire ticketing platform, and in-bus electronic ticket issuing machines (ETIM).

Over a period of time, we have witnessed an increase of 30-40% in ridership in cities that we are operational in. Reliable information and digital ticketing and payment facilities contribute to boosting passenger confidence in the services, which in turn helps in ridership.

Equally important for us is the adoption of digital tickets. COVID-19 had made us all more conscious of physical contact. In buses, 95% of the contact opportunities are linked to the exchange of cash between a conductor and passenger. With the enhanced focus on passenger safety, we have seen an increased demand for digital tickets technology as well as for live tracking. We have in fact added 11 more cities into the Chalo Cards platform during the Apr-Oct 2020 period - during and just after the lockdown.

5. The pandemic has affected the mobility sector. What are the new things coming up in the industry?

The pandemic has brought a lot of focus on safety and reducing cash especially in the bus transportation sector as a large percentage of the Indian population relies on public transport. This has accelerated digitisation in this sector for several years. Public transport systems are being revamped to introduce user-friendly contactless digital payment systems as well as better scheduling to avoid crowding. Contactless tickets like travel cards and mobile tickets reduce the risk of coronavirus transmission by over 95%.

One of the steps we have taken toward this is to introduce a semi-closed loop contactless card in association with our banking partner and also to streamline the implementation process of a contactless digital payment system. Passengers have multiple digital ticket options now - mobile tickets, mobile passes, the Chalo Bus Card, or they can even scan QR codes in the bus to pay for their ticket through UPI or any other online payment mode.

We have also introduced the “Live Passenger Indicator” option on the Chalo App wherein passengers can see how crowded the bus is, and choose to take another bus accordingly. Since Chalo’s primary focus has been to bring in efficiencies in the bus transportation systems in India with the help of technology, the emphasis on digitisation has a positive impact on our core objective and business.

6. What are some challenges and untapped potentials of the market?

One of our key challenges has been to increase the acceptance of digital technology amongst passengers. While the Chalo App is widely used for tracking of buses, acceptance of digital tickets takes a while. Digital payments have a positive cyclical effect on making bus/ public transport better. Digital payments reduce the pilferage/revenue leakage in the bus. Thus, the operators can use the extra income can for improving vehicle maintenance and training the staff. This in turn helps in improving the quality of services offered, and ridership rises.

Digital payments also help us monitor the travel patterns in a city. This further helps in designing travel plans for passengers and schedule the buses better. While the pandemic did bring the bus services to a halt for a few weeks, it has increased the awareness about safety linked to digital tickets. Many passengers are actively seeking digital ticket options. In some cities like Bhopal, with support from the city government, we managed 100% digital ticketing for a few weeks. We hope to convert 50% of all ticketing on our platform to digital in the year 2021.

7. What are your Post-Covid plans?

We plan to focus on bringing in more cities into the digital platform and work towards making buses 100% digital. Passengers, operators, and governments have all recognised the importance of technology in resuming public transport. We have seen a surge in demand for digital tickets and live bus tracking since Covid-19.

We have added 11 new cities onto the Chalo Cards platform during April-October 2020 as compared to 3 in the previous 12 months. This is a 7x increase in demand and we plan to keep up this momentum going forward.

8. Funding

We raised our Series B round of capital in the year 2018 from some marquee investors from India and abroad. Key investors include Raine, Xiaomi, Waterbridge, Amit Singhal (smart start) and Neeraj Arora.