Startups Revolutionizing Mobility for Emerging Markets

The Rise of Tech-Driven Transportation in Emerging Economies

In developing nations, the substantial costs associated with constructing comprehensive public transit systems can be prohibitive. Consequently, innovative startups are leveraging technology to address the mobility requirements of a burgeoning urban middle class.

Companies like Swvl, Treepz, Jatri, SafeBoda, Urbvan, Chalo, and Buser have emerged across Africa, Asia, the Middle East, and South America in recent years. All of these ventures concentrate on delivering on-demand transportation access. These startups aren’t merely products of these developing markets; they are actively fostering economic growth through improved mobility.

Nikos Tsafos, from the Center for Strategic and International Studies, explained to TechCrunch, “Efficient and affordable transportation is crucial for realizing the benefits of a large urban area and achieving economies of scale.” He further stated that improved mobility “enlarges the labor market and enhances its efficiency.”

While necessity often fuels innovation, the impact of these startups extends beyond their originating economies. They are also offering a model for less car-dependent urban planning, even in regions with established public transportation networks.

The success of these startups is critical. Failure to thrive could lead to increased private vehicle ownership as incomes rise in emerging markets, exacerbating the global climate crisis.

Swvl: Optimizing Vehicle Utilization for Shared Rides

Swvl, headquartered in Dubai, offers shared transportation solutions for both short and long-distance travel, catering to individual commuters, corporations, schools, and tour groups. Since its inception in 2017, the company has expanded its operations to include the UAE, Egypt, Saudi Arabia, Jordan, Kenya, and Pakistan.

The core of Swvl’s business model lies in maximizing the use of existing, often underutilized, buses or minivans owned by small and medium-sized businesses. These vehicles are repurposed for various services throughout the day. For instance, a school bus can also provide intracity commuter routes, corporate transportation, or serve tour groups.

“This significantly boosts vehicle utilization,” stated Mostafa Kandil, CEO and founder of Swvl, in an interview with TechCrunch. “Increased utilization lowers the per-ride cost, allowing us to reduce prices for consumers while simultaneously improving our profit margins.”

Passengers can book seats on fixed routes and monitor their ride’s progress in real-time. In areas with unreliable or unsafe public transit, services like Swvl’s can be transformative.

Swvl’s potential to become a unicorn underscores the strength of this industry. The company entered into an agreement in July to merge with Queen’s Gambit Growth Capital, with an estimated enterprise value of $1.5 billion.

Swvl projects an annualized gross revenue of $79 million by the end of the year, representing a 55% increase from February 2020 revenues of $51 million. The startup aims to reach $1 billion in annual gross revenue by 2025, operating in 20 countries across five continents. This expansion includes SaaS (Software as a Service) and TaaS (Transportation as a Service) offerings, facilitated by the recent acquisition of Shotl, a Spanish-based mass transit SaaS platform.

Kandil believes that while the initial product-market fit is naturally within emerging markets due to the immediate need for basic transportation, Swvl’s services have global applicability.

“Governments worldwide invest heavily in transportation infrastructure that is becoming outdated,” he noted. “Public transportation systems often fail to adapt to seasonal changes in urban movement patterns. We are building the future of mass transit – a demand-responsive system that can adapt daily, hourly, and self-optimize based on city-wide mobility.”

Treepz: Providing an ‘Uber for Buses’ in Nigeria

Onyeka Akumah, CEO and founder of Treepz (formerly Plentywaka), recounts that the idea for his startup originated from a frustrating commute in Lagos, involving multiple modes of transportation, including motorcycles, boats, and buses. He described the bus experience as precarious, requiring him to physically hold onto a door to avoid falling off.

Lagos, Nigeria’s largest city with 14 million inhabitants, faces significant daily commuting challenges. Despite being Africa’s leading startup hub, Nigeria lags behind other African nations in key metrics, according to an African Tech Ecosystem ranking. FDI Intelligence highlights the importance of cost-effectiveness, tech talent, government support, internet access, and infrastructure for entrepreneurial success. These factors are hindered by inadequate transportation options.

Treepz, like Swvl, offers commuters the ability to book intracity or intercity travel through an app, reserve seats, and track their rides. The startup is expanding throughout Nigeria and plans to enter Uganda, Ghana, and other African countries in the coming years.

“Millions rely on public transportation daily, and Treepz provides a reliable alternative to expensive Uber rides, ensuring timely and safe commutes,” Akumah explained to TechCrunch. “We aim to offer predictability, guaranteed seating, and safe, well-maintained vehicles.”

Unlike Swvl, which allows cash payments to drivers, Treepz currently operates on a cashless system, primarily targeting the middle class. Akumah cites the risks associated with cash handling, including corruption and accounting difficulties, as the reason for this policy.

Jatri: Enhancing Accountability in Bangladesh’s Public Transport

Jatri, based in Bangladesh, addresses issues of inconsistent bus schedules, payment challenges, and fluctuating routes. The startup is the first in Bangladesh to offer a bus tracking and digital ticketing platform, benefiting both bus operators seeking to improve their operations and commuters desiring a smoother experience.

Passengers can subscribe to services, plan trips, track buses, and purchase tickets, while operators gain access to valuable bus trip analytics. Jatri is also developing data that can be used by regulators for urban planning purposes.

Founded in 2019, Jatri has digitized the operations of thousands of bus partners, processing over 3.5 million transport tickets across three cities. The startup recently secured a $1.2 million pre-Series A funding round to expand its nationwide coverage and partnered with BRTC, Bangladesh’s state-owned transport corporation, to integrate its tracking and ticketing services into many of its routes, with potential for nationwide adoption.

The Importance of Transportation in Emerging Markets

As the middle class expands and incomes rise, expectations for service quality, including mass transit, also increase. Experts suggest that these rising expectations could create tension in countries like Bangladesh, where citizens may experience what economist Albert Hirschman termed the “tunnel effect.”

This occurs when disadvantaged groups perceive growing inequality during development, initially tolerating it with the expectation of future prosperity. However, if this prosperity doesn’t materialize, tolerance can turn into frustration and potentially lead to social and political unrest.

This underscores the critical role of startups focused on improving public transportation.

Tsafos emphasized, “Transportation systems connect people to employment, leisure activities, and green spaces. Without these solutions, cities may underperform, failing to fully leverage their human capital and becoming fragmented.”