Uber’s Indian rival Rapido raises $240 million at a $3 billion valuation

Indian ride-hailing company Rapido said on Friday it has raised $240 million in new funding at a valuation of $3 billion to better compete in the country’s growing but challenging mobility market.

The equity round, led by Prosus, saw participation from existing investors, including WestBridge Capital and Accel. The round was part of a larger $730 million primary and secondary financing. Rapido was previously valued at $2.3 billion during a secondary deal last year.

Rapido said the fresh capital will be used to increase its presence in high-growth markets, strengthen its driver network, and invest in technology and platform efficiency.

“We are delving into markets where demand exists, but supply remains fragmented,” Rapido co-founder Aravind Sankha said in a statement. “We will increase our focus on enhancing exposure, building technologies, and expanding our multimedia footprint, with much greater speed and intent.”

The funding round underscores continued investor interest in India’s mobility sector despite ongoing concerns about pricing pressures, regulation and profitability.

Founded in 2015, Rapido operates in over 400 cities and has driven its growth by enabling ride-hailing services for less expensive and more flexible modes of transportation such as motorcycles and auto-rickshaws in congested, price-sensitive Indian cities. The Bengaluru-based startup has expanded to smaller cities as well.

The funding comes on the heels of Uber CEO Dara Khosrowshahi’s visit to India, where the ride-hailing giant this week unveiled plans to expand its engineering and infrastructure operations through two new technology campuses and a local data center partnership. Earlier this year, Uber pumped $330 million into its branch in India as part of its effort to strengthen its presence amid increasing competition from local competitors such as Ola, Rapido and Nama Yatri.

Khosrowshahi said last year that Rapido had overtaken Ola as Uber’s biggest competitor in the country.

India is currently one of the most challenging ride-hailing markets in the world due to intense price competition, supply issues, high driver incentive costs, and evolving local regulations. However, Rapido has rapidly expanded its market share, even entering the food delivery business through its subsidiary Ownly last year.