Hailo racks up €16m loss after pulling out of North America
British taxi-hailing app Hailo, backed by star investors including Richard Branson, made an £11.76m (€15.7m) loss in 2014 thanks to the closure of its North American operations in October 2014.
The app, founded by former veteran London cabbies, allows its users to hail black cabs, unlike rivals such as Uber which only work with private minicabs.
According to company accounts, Hailo’s total £21.7m loss for the 2013-2014 financial year, to which the discontinued North American branch contributed over half, came despite a 39pc increase in its revenue, to £7.9m.
At the time of the closures, Hailo’s head office cited price pressures from competitors in the crowded ride-hailing app market, such as Uber and Lyft, saying: “The astronomical marketing spend required to compete is making profitability for any one player almost impossible.”
Although Hailo has raised over $100m in venture capital funding from well-known investors such as Union Square Ventures and Accel Partners, its rivals are flush with cash and willing to spend. Market leader Uber has raised roughly $6.6bn, while Lyft spent $96.1m on marketing in the first half of 2015 alone, according to leaked financials.
The troubled startup changed chief executives three times in as many months, appointing former COO of Carphone Warehouse Andrew Pinnington in January last year, after original co-founder Jay Bregman and Tom Barr both stepped down in the wake of Hailo’s international closures.
As part of its newly renewed expansion efforts, Hailo controversially branched out into minicab hailing, sparking protests from cabbies. In October last year, it backtracked, announcing that it would resign its private hire licence to make it fully a black-cab service once again.
At a time when Hailo’s major competitor Uber faces regulatory backlash from organisations such as Transport for London, and governmental concerns about its data handling practices, Hailo can hope to recover by going back to its roots, and putting its weight behind black cabs again.