Former cricketer Kapil Dev has invested in VAOO, a Mumbai-based cab aggregator that promises to offer free rides to passengers in return for viewing advertisements. The start-up already has around 15,000 cabs registered and will be available on Playstore from October 11.

“What I liked the most before investing is that no one needs to spend his/her time watching advertisements for free,” said Dev. He did not divulge more details about his investment. The free cab rides would be available till the user exhausts the points, which he or she can earn by watching advertisements on the app. After that, the ride costs would be comparable with what is being offered by other cab-ride applications. Currently, the application has around 20 advertisers. The application will be first launched in Mumbai and will be rolled out in Delhi and Pune by month-end.

Abhineet Pathak, Managing Director of VAOO, told BusinessLine that the company had received $15 million in funding from different investors including Dev. “We wanted our business model to help cab drivers. With this application, we would give them 100 per cent commission. We won’t take a penny of the money,” he said.

He claimed that the company was strictly an aggregator platform, and hence, did not provide any employee benefits. When pointed out that some of the existing cab-ride companies are facing issues related to labour laws due to absence of such benefits, he said: “If there is something, then the GST and taxation could be reduced for the registered cab drivers...it squeezes their income.”

On surge pricing and cancellation charges, he said that surge pricing, for now, would be capped at 1.2 times and that cancellation charges were necessary. The company plans to increase its user base to 10 million and register 3 lakh cabs in the next three months.

Commenting on the company’s concept, experts, said an advertisement-led business model may not always work. “In the past, telecom operators had tried to offer free calls for listening to advertisements, but that did not really pick up. So will have to see if it will work in the cab aggregator business,” said an expert.

"This is an interesting idea but free ad-driven business models have not succeeded. Largely because advertisers are skeptical about sites offering free ads as they are unsure about the audience profiles and attention. Secondly, I believe that for a cab app to be successful they need to build a strong fleet and community to pose a viable threat to Ola and Uber who have built a strong user base over the past 5 years," said Lloyd Mathias,  Business Strategist, and Angel Investor. 

Kartik Srinivasan, an independent communications consultant said, "The model is not based on the urgency of the need for a cab, but starts with users accumulating enough 'currency' by watching ads. This may be useful for frequent, regular trips, but once again, they would depend on the availability of cabs. There are a lot of ifs and but the service needs to sign up enough sponsors for the free rides, and those ads need to be reasonably good enough to watch, even for the prospect of free rides."

The writer is an intern with BusinessLine Mumbai