River, an Indian electric two-wheeler startup, has raised $40 million in a funding round led by Japan’s Yamaha Motor as the nearly three-year-old startup looks to increase R&D spending and expand the market presence of its first electric two-wheeler ‘SUV’ in India.
The all-equity Series B round was also led by the startup’s existing investors, including Al Futtaim Automotive, Lowercarbon Capital, Toyota Ventures, Trucks VC and Maniv Mobility. With the latest funding, the startup has raised a cumulative $68 million across four rounds, including the latest round of $15 million announced in June.
Since its inception in March 2021, River has focused on the development and production of electric two-wheelers for Indian customers, a growing and rapidly evolving market in a country keen to replace diesel and gas-powered vehicles with EVs. The biggest market opportunity in the South Asian nation — and the one with the most competition — is the two-wheeler market. Almost 50% of the total EVs sold in the country are two-wheelers with more than 1.7 million on the road today, according to government figures.
The startup believes it can stand out and gain market share Indie, a $1,700 two-wheeled scooter that’s bigger than its competitors. The Indie, which River describes as the “SUV of scooters,” has a 14-inch wheelbase and storage space big enough to fit two helmets and up to 33kg of cargo. Electric two-wheelers from the startup’s rivals – including those from SoftBank-led Ola Electric and Tiger Global-backed Ather Energy – have a 12-inch wheel size and storage space for a single helmet.
This utility-focused lifestyle product emerged after months of research and development at a dedicated facility in Bengaluru. The company has delivered nearly 200 units since it began sales in October from its first retail outlet in the southern city.
River’s first store in Bengaluru Image Credits: River
However, her ambitions are much bigger. The scooters are manufactured in a 120,000 square feet factory on the outskirts of Bengaluru that has an annual production capacity of 100,000 units (9,000 units per month). River says it plans to increase sales to 300 scooters per month in March and 3,000 units per month by the end of 2024.
“When we are a five-year-old company in March 2026, we want to be in 100 cities and reach a sales scale of about 9,000 vehicles per month, which is about $200 million in turnover,” said Aravind Mani, co. – said the founder and CEO of River in an interview.
To achieve its goals, the startup plans to build a network of distributors that will eventually handle 90% of its sales.
Mani told TechCrunch that the startup has started partnerships with some dealers and is initially looking to have distributors in 10 cities, including Ahmedabad, Chennai, Hyderabad, Mumbai and Kochi.
“We are having discussions with dealers about expansion,” he said. “We will also do more company-owned stores depending on strategic locations.”
Mani co-founded River with Vipin George (chief product officer), who previously worked as chief team designer at Honda in India. The duo has deployed more than $25 million in R&D and manufacturing in the first two and a half years and now seeks to scale River’s distribution, manufacturing and service network across the country as well as work to strengthen R&D and the blueprint for its next product, which Mani said will come after the startup reaches about 30 cities by March 2025 and 100 cities by March 2026.
“We have a few products in mind. But we still don’t know what to prioritize and start first. However, I can tell you that any product we make will fall into that particular field of utility,” Mani said.
After raising the first two rounds of funding from financial investors, Mani said River began to turn to strategic investments. The first such investment came last year from Dubai’s Al Futtaim Group, which is not just a large conglomerate in the Middle East, but also Toyota’s exclusive distributor in the UAE representing about 29 brands in about 14 countries.
The tie-up could give River access to a global distribution network once it builds its presence in India. A similar case could be with Yamaha Motor.
“With Yamaha present, there is also a strategic understanding of possible collaboration on product lines, but we don’t have definitive agreements yet, or what that collaboration will look like is not something we definitely have agreements on. So right now it’s a purely financial investment with the potential to collaborate more,” noted the co-founder.
That said, River, which has 450 employees, of which 250 are in R&D, is looking to use the partnership with Yamaha Motor to leverage its design and technology capabilities. Yamaha appears to have been sold as part of the company’s R&D efforts.
“We are impressed by the progress River has made in such a short time, especially with the strong focus on design and technology. We are excited about the belief that Aravind and Vipin have in River and how Yamaha can support the company to achieve this,” said Hajime “Jim” Aota, General Manager of Yamaha Motor Company’s New Business Development Center.
Mani did not disclose the startup’s valuation, though he cited a “significant increase in valuation, multiples of 10,” from its 2021 seed round. He also said with the new funding, the startup has enough capital to last two years.
The startup plans to reach a gross profit margin of 2,000 monthly units in 8 to 10 months. Bottom line profitability would take a little longer, according to the co-founder.
