BluSmart Revival: $30M Funding Proposed, Co-founder Exit Sought

BluSmart Investors Propose $30M Lifeline, Contingent on Co-founder Exit

Investors are considering a $30 million debt financing proposal to revive Indian ride-hailing startup BluSmart, which abruptly halted operations last month. The proposed funding hinges on co-founder Anmol Singh Jaggi's resignation.

The investment aims to address BluSmart's operational liabilities, including outstanding employee salaries and vendor dues. Discussions involving investors with pro-rata rights, including BP Ventures and ResponsAbility, began last week. Both declined to comment.

While Jaggi hasn't formally resigned, sources indicate he verbally agreed to leave the board, pending assurance of no future legal action from investors.

Operational Challenges and Potential Comeback

BluSmart's suspension followed a probe into its primary EV lessor, Gensol Engineering, a company Jaggi also co-founded. The halt impacted riders, investors, and approximately 600 employees who haven't received salaries since March.

The startup faces approximately $30 million in outstanding dues, including significant employee back pay. The suspension also left around 8,700 EVs idle, potentially impacting battery health and other vehicle components.

Drivers protested the service suspension. Some relief may come as Evera Cabs, another Delhi-based EV ride-hailing service, recently absorbed 500 of BluSmart's leased cabs and is considering adding 1,000 more, along with some drivers.

BluSmart investors aim to prevent brand dilution by limiting other ride-hailing companies from using its fleet. They hope to restart services within three weeks.

Challenges to Revival and Acquisition Interest

However, BluSmart faces challenges, including corporate governance concerns and the ongoing Gensol investigation. India's corporate affairs ministry recently launched a probe into both companies.

Jaggi's resignation from BluSmart remains uncertain. While ordered to resign from the publicly-listed Gensol, this directive doesn't apply to the privately held BluSmart.

Eversource Capital, backed by BP, expressed interest in acquiring BluSmart last month, proposing a merger with its B2B fleet operator, Lithium Urban. The BluSmart board rejected the offer, deeming the proposed valuation too low.

Adani Group also showed interest in acquiring BluSmart to utilize its fleet at its airports, where it currently partners with Uber.

BluSmart investors hope a successful restart will attract strategic investments from companies like Eversource Capital, Uber, or Adani Group.