Uber rival Karhoo confirms it is shutting down

Taxi app Karhoo has confirmed on its website that it is shutting down.

The closure of Karhoo, which has been trying to compete with US taxi giant Uber, comes less than 24 hours after Sky News reported that the company was looking to raise further capital to stop it from going into administration.

Karhoo executives are now looking at the "next steps for the business."

Founded in London just 18 months ago before relocating its HQ to New York, Karhoo worked by connecting to the fleet dispatch system of black taxi, minicab and executive car operators, allowing passengers to choose and book their ride based on price, arrival time, vehicle style and cab firm.

Karhoo's profile on startup tracker Crunchbase suggests that it raised hundreds of millions from investors but this figure has been called into question.

Karhoo apparently raised a huge $250 million (£202 million) investment round from two investors last October followed by an undisclosed Series A round from a solo investor when it launched in January. Its investors include Nick Gatfield, the former CEO of Music Entertainment, and David Kowitz, the cofounder of hedge fund Indus Capital Partners.

However, it looks as though company has been burning through cash at a phenomenal rate in a bid to grow its user base, with several customers claiming they received multiple free rides from Karhoo.

Karhoo user Omar Nawaz wrote on the London Startups Facebook group: "I got at least 120 of free cabs then stopped using it. Constant promotions does not build retention or habitual behaviour."

Here is the full statement from Karhoo:

"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."

This is a developing story...