Taxi fares worth £81m were booked through London start-up Hailo around the world last year, but its losses ballooned as the company ploughed cash into launching in new cities.
Bookings through Hailo’s app jumped by 267 per cent in 2013, with £50m worth of journeys in the UK alone. But the company, founded in 2011 by three black-cab drivers and two entrepreneurs, made a loss of £21.5m, compared with a loss of £7.6m in 2012. Revenue rose from £1.45m to £6.3m.
Hailo said in its accounts that it is “purposely unprofitable” and put the performance down to investment in technology and infrastructure, as well as launching its app in nine new cities last year, including New York, Barcelona and Osaka.
Gary Bramall, Hailo’s chief marketing officer, said the cities Hailo launched in “have been the benchmark for our growth this year”.
Mr Bramall declined to comment on whether growth this year has matched 2013, but said: “We had to take some tough decisions but we’ve had a really strong year.”
In October, Hailo pulled out of North America, blaming a price war among rivals Uber and Lyft. Co-founder Jay Bregman departed, leaving former Starbucks executive Tom Barr in charge.
Hailo’s 2013 accounts reveal it was exploring the possibility of licensing its booking platform to taxi operators in the US. The company has pursued this option in Japan and Singapore, where Hailo exists as a joint venture with local companies and Mr Bramall said it could pursue this tactic in other markets.
He said: “Sometimes it can be challenging going into cities in one way. Working with an incumbent partner provides both us and them with a competitive advantage.”
Hailo’s auditor, BDO, highlighted “material uncertainty” around “the group’s ability to continue as a going concern” in the accounts because of its reliance on raising fresh funds. Administrative expenses leapt from £8.1m to £25.1m last year, while cash reserves fell from £19.8m to £15.1m.
However, since those accounts were prepared, Hailo has raised $50m from a group of Asian investors. In total, the company has raised more than $120m from investors including Sir Richard Branson, early Facebook backer Accel Partners and Union Square Ventures, which has invested in Kickstarter, Tumblr and Twitter. Mr Bramall said the backers support Hailo’s expansion.
Mr Bramall said the company is “actively” seeking more cash. “Our sector is so buoyant at the moment, there’s a lot of interest and a lot of people want to get involved,” he said.
Hailo’s UK subsidiary, which operates in London, Leeds, Liverpool and Manchester, narrowed its losses from £1.2m in 2012 to £26,552. The UK accounted for £4m of Hailo’s £6.3m in revenue last year.Reuse content