Ride-Hailing Unicorn Uses Novel Instrument to Raise $150 Million

InDrive, the second-most downloaded ride-hailing app in the world, raised $150 million using an unusual debt instrument that links repayment to the company’s performance.

(Bloomberg) — InDrive, the second-most downloaded ride-hailing app in the world, raised $150 million using an unusual debt instrument that links repayment to the company’s performance. 

“Given the down market, we had to choose whether to offer equity or something that allows us not to put a price tag on the company,” Chief Financial Officer Dmitri Sedov said in an interview. “Since we didn’t desperately need the money, we decided to raise this kind of funding.” 

The Mountain View, California-based company tapped General Catalyst Group Management LLC to fund marketing activities and the development of new services, according to Sedov, who was co-head of Goldman Sachs Group Inc.’s Russian unit until joining the startup a year ago.

The global tech rout that’s led to thousands of layoffs at companies ranging from Alphabet Inc. to Lyft Inc. and knocked billions of dollars off of startup valuations has forced many fast-growing companies to change strategy to focus on making a profit. 

InDrive, which increased gross revenue 88% in 2022, expects to become cash flow positive this year, according to Sedov. “We are emphasizing profitability without slowing growth,” he said. 

The company was founded in the Siberian city of Yakutsk and allows passengers and drivers to negotiate the fare. Following the invasion of Ukraine, it pulled more than 1,000 staff out of Russia, a process Sedov said is nearly complete. InDrive’s app was downloaded 61.8 million times in 2022, up 45% from the previous year, according to mobile app analytics company Data.ai.

About 60% of inDrive’s business comes from Latin America, with Mexico, Kazakhstan, Brazil, Colombia and Egypt its biggest markets. While mainly present in emerging markets, last year it began working in Australia. 

General Catalyst previously participated in inDrive’s $150 million 2021 Series C investment round led by Insight Partners that valued the company at $1.23 billion. Monthly revenue has quadrupled since then, according to Sedov. 

“This debt instrument gives us flexibility on how long it will take to repay, if our markets don’t grow as we have forecast them to,” Sedov said. 

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