Failure to pivot, COVID-19 blues force Amazon-backed Shuttl to look for a buyer

• Office shuttle service Shuttl is looking for buyers, as its operations were halted due to the pandemic.
• Shuttl was fulfilling about 60,000 rides through 1200 buses before the pandemic hit.
• It had also raised $7.7 million in total external funding, before India went into a lockdown last year.

Over 10,000 companies ran out of business between March 2020 till February this year in India as per data from the Ministry of Corporate Affairs, as the first wave of COVID-19 brought in a crunch in demand for several segments and changed the trends in many others. Those who managed to survive the disruption of the first wave, were faced with even more challenges during the second one that brought India to its knees.

The app-based office shuttle service Shuttl may be the next in line to exit, as the pandemic has hit it quite hard. The company has officially announced that it is looking at a merger and acquisition (M&A) deal with a few Indian and international companies. The company has also started shutting down its business and has laid off most of its workforce.

Shuttl’s cofounder and chief executive officer (CEO) Amit Singh, in a Twitter thread, said, “It's sad that it has to come to this. In March 2020, we were on a tear. Fresh from a fund-raise in 2019. Growing fast on a base of 100k daily rides. Positive economics. Expresso, our new BU [business unit] for Intercity travel, growing vertically. About to expand internationally...”

Singh highlighted that the company’s demand fell off the cliff due to the pandemic-induced lockdown, but it managed to overcome the hurdles somehow. However, the company was hit once again with the second wave of COVID-19, as it was getting its act together. “Companies went from ‘Let's plan a back-to-office party’ to ‘Let's wait until our employees are double-vaccinated’,” the CEO added.

An investor in the company told Business Insider, on the condition of anonymity, that there was nothing really wrong with the company. The person added that Shuttl has enough cash in its bank account and had the runway to go on longer, but the uncertainty of COVID-19 was something the company could not fight off.

The source echoed CEO Singh’s views that the company had somewhat recovered its business after the lockdown, but was hit by the second wave. “The question is when [will people go back to work] and how will this work-from-home culture impact mobility,” the investor added.

Why couldn’t Shuttl find an alternative source of revenue?

Shuttl was founded by Singh and Deepanshu Malviya in 2015 and has garnered the interest of many investors since its inception. The company has raised about $122 million (₹908 crore at current conversion rate) to date from investors like Hong Kong-based venture capital firm SIG Investments, Amazon, Dentsu, Trifecta Capital, Sequoia Capital, Lightspeed India Partners, and Times Internet.


Business Insider has reached out to both Singh and Malviya seeking comments for this story, but have not received a response at the time of publishing. We will be updating the story if and when we get a reply.

It had expanded its presence across six Indian cities — Delhi-NCR, Kolkata, Hyderabad, Pune, Mumbai and Chennai — before the global pandemic hit India. It claimed to be serving over 100,000 rides daily by running 2000 buses on an aggregator model across 150+ routes in the above-mentioned six cities.

The real question that arises here is that why did Shuttl not pivot to a different business model, just to sail through the pandemic. The company aggregated buses on the platform and these buses were used to provide pick up-and-drop services for office goers for a cost. The company would pay ₹2 per kilometre for the bus and charge ₹3 per kilometre from the customer.
An investor in the startup ecosystem, who spoke to Business Insider on the condition of anonymity, believes that there could be about three potential reasons behind the company’s inability to pivot — cash crunch, founder fatigue or layoffs before they could figure out how to use their assets.

The entire travel, mobility and tourism segment was deeply impacted Failure to pivot, COVID-19 blues force Amazon-backed Shuttl to look for a buyeby the pandemic-induced lockdown and travel restrictions. Some of these companies, which also focused on office travel, found alternative business models to keep their fleet running or just earn enough money to manage their expenses.

For instance, office commuters-focused mobility company MoveInSync ended up getting into a software-as-a-service model by launching ‘WorkInSync’. The company now focuses on helping its clients move into the hybrid workplace model and enhance the employee’s experiences.

Many of these companies like bike taxi services across business to business (B2B) and business to customer (B2C) segments like Bounce, Rapido, ebikeGo and more decided to pivot their business models to keep the flow of money coming or accept the new normal and the trends it bought.

Meanwhile, other intra-city mobility services like Chalo and Cityflo raised money from both new and existing investors between November 2020 to January 2021. However, some of these players may have faced a down round due to the ongoing condition, the investor mentioned above told Business Insider. A downround is a funding round raised at a lower valuation than the previous round.

“What can you do with the buses? Use them for COVID care but that is not a business model. The other players in the segment Chalo etc., have made a path for themselves and are working on other things, the product, the technology, establishing networks within other cities even though the actual number of transactions has gone down,” the person added.

Meanwhile, Shuttl’s investor emphasised, “It’s difficult to pivot into a completely different company. Amit [Singh] is exploring all the other options.”

Shuttl’s failure to pivot, coupled with lack of cash flow, cuts lifeline

Meanwhile the possibility of a cash crunch does not seem like the real problem as the company had closed its Series C round at ₹57 crore ($7.7 million at current conversion rate) in February 2020, a month before the lockdown. But the inability to pivot may have made the company go after its cash reserves.

The company’s cash burn rate and lack of any alternative source of revenue could have cut its lifeline shorter. Shuttl earned an operational income of ₹142 crore in the financial year ended March 2020 (pre-pandemic), according to data platform Tofler. Its overall income -- from operations and investments -- was ₹148.6 crore, but it spent ₹314 crore to earn it.




The company’s expenditure in FY20 alone was more than what the company has earned from operations since its inception. Shuttl earned about ₹299.14 crore between FY17-FY20 and spent ₹700.8 crore in the same time frame. Its assets grew about three times from ₹76 crore in FY19 to ₹202.5 crore FY20.

Now that the company is looking for buyers, suitors could be other mobility companies that are looking to excel in the intra-city market space as despite the cash burn rate Shuttl did seem to provide convenient services. Moreover, the company and its remaining team does understand the segment well.

The industry source mentioned above said, “They understand intra-city passenger behaviour well. What this can be merged into is any mobility business which is trying to access a similar audience, so they could really well be absorbed or merged with [such businesses]. While for the buses, I don’t see an offering as such, but for the team, I see offerings in a Vogo, Rapido or in a Chalo. These are the outcomes I see. I see more of a startup merger than a traditional company buying it out.”

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