Gaurav Aggarwal of Savaari on MakeMyTrip acquisition and delivering service in 2,000+ cities
In this podcast episode, Amit Somani speaks to Gaurav Aggarwal, Founder and CEO at Savaari Car Rentals, who led his company to be acquired by MakeMyTrip.
Savaari is India’s largest premier chauffeur driven inter-city car rental service with presence in over 2,000 Indian cities. Its services include outstation one way drops, outstation round trips, hourly local rentals, and airport transfers.
Gaurav Aggarwal, Founder and CEO at , is a resilient, poster boy of Indian startup M&A success story. He silently built a ~₹100 crore ARR company by just raising two rounds of funding in a crowded space amidst the storms of global competition (with billions of dollars).
Savaari’s strategic merger and acquisition (M&A) with MakeMyTrip is a classic case study and an exemplar for all founders in the Indian startup ecosystem and VCs alike.
The Indian travel market
“The Indian travel market, which consists of air, hotel, trains, intercity bus, and intercity cabs, is around $55 billion. Further, breaking it down will be ~$20B is air, ~$10B is hotels, the intercity bus and the intercity cabs where Savaari operates is around $7 billion,” says Gaurav.
He says, for entrepreneurs interested in the travel market, the opportunity available is massive and highly unorganised for new players to solve problems at scale and make a dent. He adds that the travel boom is currently happening, thanks to Covid. He validates this by stating that last year was Savaari’s best year in terms of financial performance due to the uprise in travel as a trend.
Interestingly, he shares a few insights from Savaari that provides a refreshing take on Indian travellers. He says, post Covid, a new category of ‘One Way Drops’ emerged, with customers taking short-medium distance trips around 200 kms to 400 kms being the sweet spot.
Surprisingly, he says, this alone has contributed to 40% of their annual revenue. He specifies, the Mumbai-Pune, Bangalore-Mysore are the most popular routes in this category.
Battle with Uber and Ola
Gaurav was able to raise Series A and Series B funding early on between 2010 - 2013 from Athera Venture Partners (formerly Inventus India) and Intel Capital. This early infusion of capital allowed Savaari to build a strong fundamental business with a highly profitable unit-economics model.
However, when Uber entered the Indian market in 2013, and with Ola raising $210 million from SoftBank in 2015, Gaurav faced the biggest hurdle as he was unable to raise any additional capital as investors had completely ridden off the mobility market due to this duopoly.
At this critical juncture, Gaurav had a runway of about six months and a team of 200 people. Today, he believes that was the most difficult time as an entrepreneur as they had taken strict measures to resize the organisation, align priorities, and stick to their core of inter-city travel market and focusing on providing highest value to the customer.
In retrospect, Gaurav believes that their focus on unit-economics profitability, customer satisfaction, and sustained growth has enabled them to greater success as of 2024. He highly recommends every entrepreneur to focus on profitability from Day 0.
Acquisition by MakeMyTrip
Gaurav delivers a masterclass in M&A, the most valuable lesson for every entrepreneur building their startup. He explains that 2023 was a phenomenal year for Savaari in terms of financial performance as it grew 40% from its pre-pandemic numbers.
Based on this, it received inbound interest for M&As from a few Online Travel Agencies (OTAs). However, Gaurav believed shared the same synergy as Savaari in solving this huge inter-city travel problem in India and their long history of working with each other as partners/suppliers in the marketplace model. Due to the longstanding positive working relationship, Gaurav reached out to the team at MakeMyTrip, and as they say, rest is history!
Emphasising the tenets of M&A from a VC lens for the viewers, Amit Somani says, "M&A doesn’t happen overnight, it needs to be cultivated through years of great relationships, culture fit on both sides and be open to exercising this option whenever there is interest."
On final thoughts, Gaurav proudly claims that Savaari Car Rentals will be a ~₹1000 crore company in the next five years.
Timestamps:
0:00 - From Cisco to Car Rental Startup
4:16 - Transitioning to Entrepreneurship in India
7:45 - Intercity Transportation Market Insights
19:01 - Navigating the Competitive Landscape
23:33 - Staying the Course
30:59 - Entrepreneurship Evolution and Growth Strategy
Edited by Megha Reddy