Journey of a Thousand Miles — Why We Invested in Shuttlers

Lavanya Anand

November 16, 2021

The Problem

Tosin is a customer service representative at an established Nigerian Bank. Every day he wakes up at 4am to get ready for work. He leaves his house in Ikorodu at 5am. He pays 100 NGN to catch an okada to the nearest danfo bus stop. He pays another 300 NGN to take the danfo from Ikorodu to Mainland. He then waits 20 minutes at his next bus stop to catch the danfo from Mainland to the bus stop in Victoria Island, another 300 NGN. As a last step, he takes one more okada for 100 NGN to reach his final destination at the bank branch. The entire journey can easily take over 3 hours so he does not reach the office before 8am. Not to mention this journey is often either in 40℃ heat or during a torrential downpour. The danfo buses have no AC, are overcrowded beyond their seat capacity, and are known for theft and harassment, so sleeping during the commute is not an option. Tosin arrives at work tired and frustrated by his morning commute, which shows in his productivity and service levels throughout the day. Come 4pm, he has to do it all over again, this time in the opposite direction. Within a month he spends up to 35,000 NGN (or more) on his commute compared to his 50,000 NGN per month salary. This experience is very typical for the average working class Lagosian. There is clearly room for improvement in commuting options which would have positive effects on work productivity, mental health, quality of life, in addition to environmental benefits.

By 2100, Africa is expected to outpace every other continent in population growth, with 56% of the continent’s population expected to live in urban areas by 2050. The Lagos metropolitan area — with over 20 million residents — is the largest metropolitan area in sub-Saharan Africa. Nigerian cities — the nerve centers of socio-economic and political activities — are paralyzed by inefficient transportation, which costs an estimated 5 billion USD. For commuters, this congestion means an average of 30 hours spent in traffic per week. Despite poor service conditions and low availability, the cost of public transport is very high, costing on average 40% of a household’s disposable income. For women, commuting is particularly challenging due to increased safety concerns, including sexual harassment.

It is estimated that 12 million people use public transport daily in Lagos, suggesting a total addressable market of at least 5.7 billion USD. Within the office commute market, we estimate a market size of at least $420 million from nearly 450,000 employees in small-to-large companies. Limited quality options exist, with the state-subsidized Bus Rapid Transit system only carrying 200,000 passengers per day and the majority using the informal danfo buses. Buses account for almost 70% of the share of motorized person trips (3% BRT, 67% unregulated buses), taxis and private cars account for 20%, okada (motorcycles) account for 9%, and rail and water account for 1%.

Why Shuttlers?

Shuttlers addresses these challenges through its digital ride sharing platform that targets upwardly mobile professionals and companies looking for better mobility options for their employees. Through the platform, customers can pre-book a seat on one of their buses that go along scheduled routes, reducing the issue of overcrowding and long wait times. Some of the other features include live bus tracking, optimal routing based on traffic, digital payment, and AC. Shuttlers specifically targets entry- and mid-level professionals, who typically cannot afford to buy a car, would find traditional public transport options uncomfortable or inconvenient, and Uber too expensive. Shuttlers has developed a network of partners — both asset and financial — to support its expansion.

There are a few players within the tech-enabled bus mobility sector, but Shuttlers has a strong first-mover advantage with respect to B2B clients, number of routes and riders, and bus partnerships. They will leverage these network effects to continue onboarding additional customers and bus partners.

Shuttlers rider mobile app

The vision to rapidly scale Shuttlers is big and behind this big vision is Damilola Olokesusi, a strong Nigerian female tech founder who bootstrapped the business to $1M+ annual revenue. We’re proud to back Damilola as she takes Shuttlers to the next level . She was laughed out of the room in her first meeting with a bus partner as a young woman in the male-dominated mobility and logistics sector. Yet that didn’t discourage her — Dami is the definition of grit and persistence. We’re excited to see the heights she and her team will reach with the injection of external capital and support of new investors and advisors. We are also happy to be joined in this round in particular by African investors and African women investors alongside strategic investors with deep mobility expertise who support the vision.

What’s Next?

Rapid urbanization has created societal problems around the world, including congestion and carbon emissions, and unmet demand for affordable, convenient, environmentally-friendly transportation. As a result, the mobility tech scene is “hot” right now. Worldwide, venture investors poured $23.4B into mobility tech startups in Q1 2021. We believe that the above-mentioned needs are far from solved, and that this will further drive long-term industry growth. In bus hailing specifically, key players have raised impressive rounds in recent years. Careem raised $700M, Shuttl in India raised $122M, and Swvl raised $107M. When we think about exits in this industry, the three most probable paths for Shuttlers are strategic acquisition, secondary sale to another investor in a future round, or an IPO / SPAC (see Swvl’s SPAC merger worth $1.5B).

Since our investment, the Company has already hired some all-star team members to drive technology, sales, marketing, operations and finance. They already have their sights on expanding beyond Lagos. While we expect some inevitable bumps along the road, we’re excited for the journey! (pun intended)

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