Hailo, one of a growing number of companies using smartphones to dispatch taxis in Boston, has received $30.6 million in funding to expand its service across the United States and globally.
Among the new investors in the London company is Richard Branson, the billionaire chairman of the Virgin Group, and the New York firm Union Square Ventures, one of the early investors in the social media network Twitter. They are making a big bet that consumers will increasingly use smartphone apps to hail cabs instead of waving down drivers on the street or calling dispatchers.
Started in London in 2011 and now serving 10 cities around the world, Hailo launched in Boston last October and has 1,100 drivers enrolled. The new funds will allow Hailo to make a big push into the taxi-saturated markets of New York City and Tokyo.
These types of services are beginning to take off because “everyone is running around with smartphones in their pockets, including cab drivers,” said Fred Wilson, a managing partner at Union Square Ventures.
Since smartphones are equipped with GPS technology that can determine a user’s location, the devices can relay that information to cab companies or taxi drivers as a way to set a pickup location. Some cab apps, such as Hailo and Uber, allow users to pay fares directly on smartphones, too.
“It just makes life easier for everyone involved,” said Wilson.
The growing consumer interest in using taxi apps has led to something of a battle among start-ups vying to win consumers while persuading traditional cab companies to adopt the technology.
“We’ve been contacted by every app company under the sun for the past two years,” said Tiffany Mitchell, manager of Top Cab and City Cab in Boston, which together have a fleet of 500 taxis.
Last year, Mitchell worked with another South Boston tech company, Pingup, which launched a cab app last fall. Unlike competitors Hailo and Uber, Pingup integrates directly with a cab company’s dispatch system.
That means even if riders use Pingup to order a cab, it’s the dispatcher that receives the notice, not the driver, which Mitchell said is more efficient.
Most cab apps will cost consumers a bit more than hailing a taxi the old fashioned way. Uber, for instance, adds a $1 booking fee and 20 percent gratuity. Hailo has a $1 service fee that increases to $2.50 during rush hour. Pingup users don’t pay through the app and are charged based on the cab’s regular meter.
The first company to offer an app for tech-savvy Bostonians to use phones to snag a taxi was RideCharge Inc., a Virginia company that launched its app here in fall 2008. Last month, the company suspended its service within Boston due to a dispute with the taxi company it worked with.
Until it stopped service in the city, RideCharge spokesman Matt Carrington said, usage of the app in the city was climbing 20 percent a month. And even though Taxi Magic and others are benefiting from the growing use of smartphones, when the vast majority of people use phones to hail a cab, they are not using an app.
“Our biggest area of competition is still the phone call,” Carrington said.
Still, the upstarts are struggling to get taxi regulators to quickly adopt their new way of pricing fares. Uber, for example, relies on GPS technology in phones to calculate fares for its black car service. But several municipal regulators around the country, including those in Cambridge, contend that smartphones are not approved for metering taxi fares.
While Uber first launched in Boston in October 2011 with an app for users to hire a private car service, it expanded to include cabs in September. Since then, the company said, it has completed “tens of thousands of trips.”
Taxi apps available in Boston
Available in 10 cities
Available in 30 cities
- TAXI MAGIC
Available in 54 cities
Available in Boston only
Michael B. Farrell can be reached at firstname.lastname@example.org.