River, an Indian startup manufacturing electric two-wheelers, 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 ‘SUV’ two-wheeler in India.
The all-equity Series B round also saw participation from startup’s existing investors, including Futtaim Automotive, Lowercarbon Capital, Toyota Ventures, Trucks VC and Maniv Mobility. With the latest funding, the startup has cumulatively raised $68 million in four rounds, including the last round of $15 million announced in June.
Since its founding in March 2021, River has focused on developing and producing electric two-wheelers for Indian customers, a burgeoning 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. Nearly 50% of the total EVs sold in the country are two-wheelers with more than 1.7 million on the roads today, according to government data.
The startup believes it can stand out and carve out market share with Indie, a $1,700 two-wheeled scooter that is larger than its competitors. Indie, which River describes as the “SUV of scooters,” has a 14-inch wheelbase and storage space large enough to hold two helmets and cargo weighing up to 33 pounds. 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 for a single helmet.
This utility-lifestyle focused product was borne out of months in R&D at a dedicated facility in Bengaluru. The company has delivered close to 200 units since launching sales in October from its first retail store in the southern city.
River’s first store in Bengaluru Image Credits: River
Its ambitions are far larger, however. The scooters are manufactured at a 120,000-square-foot factory on the outskirts of Bengaluru that has an annual production capacity of 100,000 units (9,000 units a month). River says it plans to increase sales to 300 scooters a month in March and 3,000 units a month by the end of 2024.
“By the time we are a five-year-old company in March 2026, we want to be in 100 cities and come to a scale of selling around 9,000 vehicles a month, which is approximately $200 million in turnover,” Aravind Mani, co-founder and CEO of River, said in an interview.
To achieve its goals, the startup plans to establish a distributor network that will eventually handle 90% of its sales.
Mani told TC the startup began engagements 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 for 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), previously working as a group head designer at Honda in India. The duo has deployed over $25 million in R&D and manufacturing in the first two-and-a-half years and is now looking to scale River’s distribution, manufacturing and service network across the country as well as work toward strengthening its R&D and draft the blueprint for its next product, which Mani said would come after the startup reaches to around 30 cities by March 2025 and 100 cities by March 2026.
“We have a couple of products in mind. But we do not know what we will prioritize and launch first yet. However, I can tell you that any product we do will be within this particular purview of utility,” Mani said.
After raising the first two rounds of funding from financial investors, Mani said River started to pivot to strategic investments. The first such investment came last year from Dubai’s Al Futtaim Group, which is not just a large Middle Eastern conglomerate but also an exclusive Toyota distributor in the UAE that represents about 29 brands in around 14 countries.
The relationship 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 coming on board, there is also a strategic understanding to possibly collaborate on product lines, but we don’t have definitive agreements yet in place, or how that collaboration will look alike is not something that we have definitely agreements on. So, at this time, it’s a pure-play financial investment with the potential to collaborate more,” the co-founder noted.
That said, River, which has 450 employees, of which 250 are in R&D, seeks to use the partnership with Yamaha Motor to leverage its design and technology capability. Yamaha appears to have been sold on the company’s R&D efforts.
“We are impressed by the progress that River has achieved in such a short span of time, especially with the strong focus on design and technology. We are excited about the conviction that Aravind and Vipin have for River and how Yamaha can support the company to achieve this,” Hajime “Jim” Aota, Chief General Manager of New Business Development Centre at Yamaha Motor, said in a statement.
Mani did not disclose the valuation of the startup, though he mentioned “a significant increase in valuation, multiples of 10,” since its seed round in 2021. He also stated with the fresh funding, the startup has enough capital to last for two years.
The startup projects to reach gross margin profitability with 2,000 monthly units in 8 to 10 months. Bottom-line profitability would take a little longer, according to the co-founder.
