River, an Indian startup manufacturing electrical two-wheelers, has raised $40 million in a funding spherical led by Japan’s Yamaha Motor because the almost three-year-old startup seems to be to extend R&D spending and broaden the market presence of its first electrical ‘SUV’ two-wheeler in India.
The all-equity Collection B spherical additionally noticed participation from startup’s current buyers, together with Futtaim Automotive, Lowercarbon Capital, Toyota Ventures, Vans VC and Maniv Mobility. With the most recent funding, the startup has cumulatively raised $68 million in 4 rounds, together with the last round of $15 million introduced in June.
Since its founding in March 2021, River has centered on growing and producing electrical two-wheelers for Indian prospects, a burgeoning and quickly evolving market in a rustic eager to exchange diesel and gas-powered autos with EVs. The largest market alternative within the South Asian nation — and the one with essentially the most competitors — is the two-wheeler market. Almost 50% of the entire EVs offered within the nation are two-wheelers with greater than 1.7 million on the roads at this time, in line with authorities knowledge.
The startup believes it might probably stand out and carve out market share with Indie, a $1,700 two-wheeled scooter that’s bigger than its rivals. Indie, which River describes because the “SUV of scooters,” has a 14-inch wheelbase and space for storing massive sufficient to carry two helmets and cargo weighing as much as 33 kilos. Electrical two-wheelers from the startup’s rivals — together with these from SoftBank-led Ola Electrical and Tiger World-backed Ather Power — have a 12-inch wheel measurement and storage for a single helmet.
This utility-lifestyle centered product was borne out of months in R&D at a devoted facility in Bengaluru. The corporate has delivered near 200 models since launching gross sales in October from its first retail retailer within the southern metropolis.
River’s first retailer in Bengaluru Picture Credit: River
Its ambitions are far bigger, nevertheless. The scooters are manufactured at a 120,000-square-foot manufacturing facility on the outskirts of Bengaluru that has an annual manufacturing capability of 100,000 models (9,000 models a month). River says it plans to extend gross sales to 300 scooters a month in March and three,000 models a month by the tip of 2024.
“By the time we are a five-year-old company in March 2026, we want to be in 100 cities and come to a scale of selling around 9,000 vehicles a month, which is approximately $200 million in turnover,” Aravind Mani, co-founder and CEO of River, mentioned in an interview.
To attain its objectives, the startup plans to determine a distributor community that can ultimately deal with 90% of its gross sales.
Mani informed TechCrunch the startup started engagements with some sellers and is initially seeking to have distributors in 10 cities, together with Ahmedabad, Chennai, Hyderabad, Mumbai and Kochi.
“We are having discussions with dealers for expansion,” he mentioned. “We will also do more company-owned stores, depending on strategic locations.”
Mani co-founded River with Vipin George (chief product officer), beforehand working as a bunch head designer at Honda in India. The duo has deployed over $25 million in R&D and manufacturing within the first two-and-a-half years and is now seeking to scale River’s distribution, manufacturing and repair community throughout the nation in addition to work towards strengthening its R&D and draft the blueprint for its subsequent product, which Mani mentioned would come after the startup reaches to round 30 cities by March 2025 and 100 cities by March 2026.
“We have a couple of products in mind. But we do not know what we will prioritize and launch first yet. However, I can tell you that any product we do will be within this particular purview of utility,” Mani mentioned.
After elevating the primary two rounds of funding from monetary buyers, Mani mentioned River began to pivot to strategic investments. The primary such funding got here final yr from Dubai’s Al Futtaim Group, which isn’t simply a big Center Japanese conglomerate but additionally an unique Toyota distributor within the UAE that represents about 29 manufacturers in round 14 international locations.
The connection might give River entry to a worldwide distribution community as soon as it builds its presence in India. An analogous case may very well be with Yamaha Motor.
“With Yamaha coming on board, there is also a strategic understanding to possibly collaborate on product lines, but we don’t have definitive agreements yet in place, or how that collaboration will look alike is not something that we have definitely agreements on. So, at this time, it’s a pure-play financial investment with the potential to collaborate more,” the co-founder famous.
That mentioned, River, which has 450 staff, of which 250 are in R&D, seeks to make use of the partnership with Yamaha Motor to leverage its design and expertise functionality. Yamaha seems to have been offered on the corporate’s R&D efforts.
“We are impressed by the progress that River has achieved in such a short span of time, especially with the strong focus on design and technology. We are excited about the conviction that Aravind and Vipin have for River and how Yamaha can support the company to achieve this,” Hajime “Jim” Aota, Chief Basic Supervisor of New Enterprise Growth Centre at Yamaha Motor Firm, mentioned in a press release.
Mani didn’t disclose the valuation of the startup, although he talked about “a significant increase in valuation, multiples of 10,” since its seed round in 2021. He additionally said with the contemporary funding, the startup has sufficient capital to final for 2 years.
The startup tasks to succeed in gross margin profitability with 2,000 month-to-month models in 8 to 10 months. Backside-line profitability would take a little bit longer, in line with the co-founder.
