A few months ago, we reported on the collapse of Karhoo – a fledgling ride sharing startup that served the New York and London area. The company failed after it ran out of cash. By some estimates, it burned through an impressive $250 million funding round (although some sources say the real figure was lower) in 18 months, leaving in its wake a mountain of unpaid salaries and bills.
In the startup world, it’s rare that you get a second chance. But here we are with French car manufacturer Renault buying Karhoo for a minuscule $1 million.
“This event was off the charts”
Gary Vaynerchuk was so impressed with TNW Conference 2016 he paused mid-talk to applaud us.
The details of this deal have been confirmed by TechCrunch. Stepping into the role of co-CEOs are Boris Pilichowski and Nicolas Andine, who ran the company in the final days before its collapse.
Providing total financial backing is RCI Bank and Services, which is the financial services wing of Renault.
A document provided to TechCrunch shows that Renault will be plunging $1 million into the company. Half with be used by Karhoo for the day-to-day operation of the company, with the other half going to unpaid creditors. There’s also an additional $15 million of investment confirmed.
The original Karhoo had 200 employees, based in London, New York, and Tel Aviv. This time around, it’s believed that there will only be 35 staffers, situated in London.
In a statement, Gianluca De Ficchy, CEO of RCI Bank and Services, said “The acquisition of the start-up Karhoo appeared as a sudden opportunity that we did not want to miss and the acquisition was completed rapidly.”
“We have met the highly-motivated teams, and I have every confidence in Karhoo’s business model; it is innovative and underpinned by a first-class technological platform” he added.
De Ficchy also acknowledged the various problems that resulted in the original Karhoo’s collapse, namely that it failed to launch the mobile application in a timely manner.
Karhoo also suffered from some billing issues – overcharging in some cases, and failing to charge in others. It also lacked sufficient fraud protections.
With the cautious hand of Renault at the wheel, there’s a chance that the issues that Karhoo could be a modest success, this time around. But given its high-profile collapse, its tainted name, and the dominance of Uber in its home market of London, I wouldn’t bet too much on it.