Taxi app Karhoo is set to go into administration unless it can raise more capital from investors, Sky News reports.
The cab comparison and booking app, which claims to have raised over $250 million (£202 million) to help it compete with Uber, is reportedly on “a frantic search for new investment.”
Founded in London and currently headquartered in New York, Karhoo works by connecting to the fleet dispatch system of black taxi, minicab and executive car operators, allowing passengers to choose and book their ride based on price, arrival time, vehicle style and cab firm.
It’s unclear how much money the company, led by entrepreneur Daniel Ishag, needs to raise in order to stay afloat.
However, an internal company memo — sent round the company on Monday and seen by Sky News — informed staff that an undisclosed male investor was poised to “take over” Karhoo.
“The key discussion points have been around providing him with reassurances about the state of the business, as he is being asked to invest money today with no due diligence done,” the memo reportedly reads.
“The result of these discussions is a term-sheet received overnight, outlining the terms under which the investor is willing to take over Karhoo and fund it to break even.
“While there are still some items which need to be negotiated, the terms are very close to being acceptable.”
The founders of Karhoo are reportedly offering to put $600,000 (£484,000) of their own money into the company to supplement any capital pledged by the mystery investor.
Karhoo employs up to 250 people, according to its page on startup tracker Crunchbase. However, a number of Karhoo employees in its Israeli research and development (R&D) centre were reportedly told on Sunday that they will be losing their jobs.
It continues: “We understand that patience is wearing thin. Today we will all have a final answer: if we can put the R&D centre back in shape, and negotiate the last points of the term-sheet, we will have a business tomorrow. If not, the board will have tonight to call for closing the business.”
Last October, Richard Holway, chairman of analyst firm TechMarketView, told The Financial Times: “I do get blown away by the amount invested in these [taxi app] companies and their valuations. It’s crazy. A lot of people, particularly those who invest in the later fundraising rounds, will lose money.”
Karhoo did not initially respond to Business Insider’s request for comment.
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