SOURCES: London ridesharing startup Hailo is in talks to raise a crucial new round of funding by the end of this year
Sources have told Business Insider that the negotiations come at a crucial time for Hailo, and it could be forced to make tough decisions about staffing if it doesn't raise money by Christmas. However, Hailo denied to Business Insider that it faces closure if money is not raised this year.
Hailo was forced to pull out of the US in October 2014. It laid off 40 employees, and CEO Jay Bregman was also let go by the company. It was a humiliating period for Hailo, which has raised over $100 million (£63 million) in venture capital funding.
Hailo last raised money in January 2014 from Hong Kong investment firm Vectr Ventures. It had previously brought in funding from Union Square Ventures, Accel Partners, Richard Branson, and other investors. It's unclear whether any existing investors intend to invest more money into Hailo.
One possible source of funding for Hailo is Didi Kuaidi, the large and well-funded Chinese ridesharing service that recently invested in Lyft. Didi Kuaidi did not respond to a request to comment on this article.
Here's the statement Hailo provided to Business Insider when asked about rumours that it is raising funding:
All companies in the early or growth stages of their life cycle, like we are, are always open to opportunities to raise funds to grow and deliver the best possible service for our customers.
Business Insider spoke to Shahar Waiser, CEO of Hailo competitor Gett, in July. He told us what he thought about Hailo's embarrassing departure from New York:
The problem that Hailo experienced in the US - it's my personal opinion - is that they chose to work with yellow cabs in Manhattan. The way it works in New York is a little bit different. In Manhattan there are only yellow cabs, so people don't need an app to hail yellows because they are available. They need black cars when they are outside of Manhattan. And second, they want to have a black car in Manhattan for when yellows are unavailable. If you work only with yellows, the only time you will use an app like Hailo or Gett is when yellows or busy or it's raining. And exactly at this time when you need them, yellows will not be responding to requests because they have so much work on the streets. So they just made a wrong choice in the supply, nothing else. And statistics show they had 80% rejection on the orders.
The Independent reported in 2014 that Hailo made a loss of £21.5 million that year after it ploughed cash into expanding to new cities around the world. Hailo said at the time that it was "purposely unprofitable" due to investments in technology and marketing.
Sources tell Business Insider that Hailo is working with the New York banking advisory company LionTree on its search for funding, and that the firm is helping Hailo to craft a pitch that is more attractive to investors. LionTree did not respond to a request for comment. Hailo told Business Insider that "all companies in a growth stage will consider their options on raising funding and work with both internal and external resources to support them to do so."
Hailo's website says that it currently operates in the UK, Ireland, Spain, Singapore, and Japan. Business Insider has learned that Hailo's operation in Ireland is performing well, and could be seen as an example to investors of an area where Hailo can succeed.