Drivezy — the startup out of India that wants to turn private car usage on its head through a car-sharing network where people lend their cars and two-wheeled vehicles but also have options to use vehicles from a fleet managed by Drivezy — said it is raising more money as it gears up for the next stage of its expansion, including a launch in the US in coming weeks.
The company is in the process of raising $100 million in equity funding, plus another $400 million in asset financing, with the latter to help continue building out the inventory that sits alongside the vehicles provided by its users. This would technically be a Series C and is being raised at a $400 million valuation, the company confirmed to me.
“Currently” is the key word: Ankur Sengupta, who heads up business development for Drivezy, said in an interview that the startup will leave the round open for about a year and continue raising it on a rolling basis, with the valuation varying accordingly. “The valuation we are working at now is $400 million, but we will keep accepting investments, at different valuations,” he said.
(Note: This is not an entirely new way of raising rounds, but in the last few years, it has become a lot more common to see it rather clear “Series” blocks. Fast-growing companies like Snap and more recently Grab in Southeast Asia have chosen this route to tap into readily available funding faster and closer to when it’s actually needed.)
The company is not disclosing any names right now except to note that it is likely to include a new, large investor from Japan, and that it also has commitments from investors in the US, Singapore and China. Previous backers have included the Yamaha Motor Company, Axan Partners and IT-Farm, as well as Y-Combinator — where Drivezy was a part of a 2016 cohort as JustRide, led by its five founders Amit Sahu, Ashwarya Pratap Singh, Vasant Verma, Abhishek Mahajan and Hemant Sah. It has also been through Google’s Launchpad accelerator, although it doesn’t look like Google is investing (yet).
Drivezy last raised money as recently as three months ago, a $20 million Series B, when it also raised $100 million in asset financing. Alongside users’ own cars and the fleet it manages, Drivezy also works with in partnership with dealerships and others to provide vehicles for its inventory.
Between then and now, the company has seen a lot of growth.
The company gets more than 53,000 bookings for cars each month, versus 37,000/month just three months ago. Two-wheeled vehicles — primarily motorcycles — add nearly 30,000 more. While cars are typically booked for two-three days, two-wheeler bookings are weekly or monthly bookings.
The inventory has also gone up. Currently, there are 7,500 two-wheelers on the platform, with another 7,500 coming by the end this month; and 3,500 cars. (This is up from 5,000 motorbikes and scooters and 3,000 cars three months ago.) Currently there are 30 dealerships and more than 25 banks and other financial companies in Drivezy’s network.
Drivezy’s growth is coming at what seems to be a key inflection point for the transportation industry.
Some believe the the days of vehicle ownership in mature markets like the US are numbered, with several developments helping that trend along: the rise of over-expensive self-driving cars that many will not be able to afford; the proliferation of affordable Uber-style services; and the emergence of startups like Getaround (which will be a direct competitor to Drivezy when it comes to the US) and Fair to make it easy and cheap to procure a car ride without buying a car or using old-school car rental services.
But in developing markets like India, vehicle ownership is already a relative rarity, even if the desire to use a car is not: currently only seven percent of Indians own a car and sixteen percent own two-wheelers.
“That’s meant that the auto industry has been slow to grow here,” Sengupta said. (That, plus patchy public transport in many urban areas, has also meant a lot of growth, incidentally, for the likes of Ola.)
Drivezy’s response has been to create a completely new supply chain for private car and two-wheeled vehicle usage. Customers include people who are not able to purchase a car, those who do have cars but would appreciate some income to help pay off the loans they took to get them, plus car companies and dealerships who are looking for new avenues and business models to shift more vehicles.
Currently, the P2P side of the business is most popular on the car side of the business, where 70 percent of the inventory has been listed by private owners, while only 35 percent of the two-wheelers come from private owners (all the P2P vehicles get a “fitness check”. Most of the rest are listed by asset financing companies through SPVs on a revenue sharing basis, with less than two percent on Drivezy’s own books. These, the Sengupta said, have been purchased to meet licensing obligations in India.
While Drivezy has definitely benefitted from useful market conditions — low vehicle ownership and a rapidly growing, tech-savvy middle class with disposable income and more reasons for travelling — now the plan will be to take its model to other markets, including both those that have similar conditions to India’s, as well as those that are more developed (and hence, more competitive).
That will include the US, where the company is planning on setting up its first pilots in April to test demand in different markets and market segments, Sengupta said. While it’s a very different market — and certainly more competitive when you consider the likes of Getaround, Turo, Fair and others — Drivezy (its founders having spent time there going through Y Combinator and Google’s accelerator) thinks that there is a gap in the area of microlending and the fact that even with a lot of options already, there can be more.
“People have an aspirational needs, they want better cars, BMWs and Audis for example, and there are no companies tackling the issue of bringing the cost of renting these models down,” Sengupta said. Considering that there is also a burgeoning market for scooters in the country, that could also be an area where Drivezy will get involved.
The pilot/expansion in the US will come alongside building and hiring for an innovations lab in the country, a pattern that Drivezy will also be following when it expands in Asia as well. Other countries where it plans to go this year, he said, include Indonesia, Thailand and Singapore.
It’s not often that you hear about startups out of India expanding to the US, so that in itself (in my opinion) is a great story about how the gravitational pull of the tech world has indeed shifted away from Silicon Valley. Ultimately, the international expansion to North America and other markets will serve a dual purpose for Drivezy. Not only will it help the company grow business, but it’s putting the company on the map, and that too will help attract more funding attention.