When you open the bus shuttle service provider ZipGo’s application, it looks like intracity shuttle services across all cities have been suspended. This complete shutdown has come after the company pulled the plug from key cities – Bengaluru and Mumbai – two months ago.
Entrackr had exclusively reported the suspension of ZipGo’s service in both cities in February this year. While using the ZipGo app we found that it’s not suggesting any route across NCR, Jaipur, Kolkata, and Pune, or any city for that matter.
We also have confirmed this with many employees who used to work at ZipGo and were recently laid off from the company. “Intracity shuttle service has been suspended across all locations. The firm has fired over 60 employees who were looking after intra-city division,” said a mid-level employee (on condition of anonymity) who was fired from the company.
We also confirmed mass layoff independently with several sources inside and outside of the company.
Although, ZipGo continues to operate inter-city bus service in a few cities at the moment. Its app shows buses from Delhi to Jaipur. However, searches from Mumbai to Pune, Kolkata to Asansol didn’t fetch any results or route suggestion on the web as well as mobile applications.
Things for ZipGo had changed drastically post announcing Rs 300 crore proposed funding from Subhash Chandra’s Essel Group. Soon after the announcement, Essel Group began to see its days worsen as media reports highlighted a link between the group and Videocon in depositing of large cash during demonetization. The investigation is still going on.
The revelation triggered a 26 per cent fall in its share price in January. To pay Rs 17,174 crore debt, the public firm has been scouting for possible investors in Zee Entertainment for over several months. Clearly, the crisis at Essel Group had impacted its investment commitment in ZipGo.
In fact, ZipGo had received not a single penny from Essel Group. According to RoC filings accessed by Entrackr, the firm had not raised any money till now since December 2017. It rarely happens that money is not wired even after three-quarters of the funding announcement.
Given that Essel itself had mired in controversy and crisis, the group seems to have backtracked from its commitment.
Entrackr has written to Jitendra Sharma, co-founder, and CEO of ZipGo to know whether the firm had received any tranche of a Rs 300 crore round. Separate queries to Essel Group and Orios Venture that led the seed round in Zipgo also remain unanswered till the publication of this post.
We will update the post as and when they respond.
Scaling down of company’s operations and shut down of intracity shuttle service have been fall out of crisis erupted at Essel. Looks like the Chandra-led group won’t put any money in ZipGo since he has to save his own empire. While we don’t know what exactly led his company to walk out from the deal, certainly ZipGo is struck with bad luck.
Will the company got out of slumber and able to raise funds from other investors – is a big question?
ZipGo tragedy also is a lesson to existing and aspiring entrepreneurs. Startups must do proper diligence before saying yes to strategic money and certainly put enough clauses to safeguard their interest in a situation like this.