Zoomcar, the Bengaluru-based car rental platform, today raised $40 million in Series C funding. The fund raise was led by Mahindra & Mahindra.
Zoomcar today announced it had raised $40 million in Series C funding led by Mahindra & Mahindra Ltd. Existing investors also participated in the round. Zoomcar had, in August 2016, raised $24 million in Series B funding. With the latest round of funding, the total funds raised by Zoomcar stand at $100 million, according to Crunchbase.
The funds will primarily be used to accelerate Zoomcar Associated Programme (ZAP), increase supply for its marketplace, and improve its lead within IoT technologies. Zoomcar is also looking to expand into additional mobility categories across the country. Greg Moran, Co-founder and CEO, Zoomcar, said,
"While we already have the teams in place, we definitely are looking at bolstering our data sciences and technology teams. Also, in terms of Cadebra, (Zoomcar's IoT technology), we are looking to add more features to make driving a better and a safer experience."
Operational for five years now, Zoomcar has a fleet of nearly 3,000 cars spread across 26 cities. The team adds that its ZAP marketplace accounted for 25 percent of the fleet size. As of January end, the company said it had turned EBITDA (earnings before interest, tax, depreciation, and amortisation) positive.
The company also recently launched ZAP Subscribe, a monthly subscription-based programme for cars. Last October, it had launched PEDL, its dockless cycle sharing service. The team adds that the service is present in 10 cities, and has a fleet of over 3,000 cycles. Over 15,000 rides have been completed through PEDL and Zoomcar has partnered with leading universities, IT parks, residential societies, municipal corporations, and Smart City groups.
The team also aims to use the funding to include over 15,000 subscriber vehicles on the platform before the end of 2018. Zoomcar also expects to dramatically increase its cycle count to meet the robust customer demand. Zoomcar envisions that its PEDL service will operate across more than 75 cities by year-end.
“Our collaboration with Mahindra dates back to 2013 when we first kicked off in Bengaluru. Most importantly, Mahindra shares Zoomcar’s vision for multi-modal urban mobility and we look forward to leveraging their diverse platform to help accelerate the transformation to a shared, electric mobility future for India,” said Greg.
The team adds Mahindra SUVs form a majority of Zoomcar’s fleet within the segment. With respect to electric collaboration, Zoomcar recently launched E2O plus vehicles across Mysuru, Bengaluru, and Hyderabad.
In coming months, Zoomcar expects to add over 500 Mahindra E2Os across 20 cities. Zoomcar and Mahindra expect to closely collaborate on electric charging infrastructure to further expand the use cases for EVs.
In conversation with YourStory, Greg explained ZAP Subscribe, saying:
“While ZAP got us traction, what we realised was that we weren't pushing it to the full potential. We realised there was a long lead time from the time when you say you want to be a ZAP associate till the time you get the car at your place. The core reason for this is it is a very different registration process for a black board car and a white board car.”
Financing documentation, and regulatory regime take time - it is legal, but is an onerous process, he adds.
“We wanted Zoomcar to act as a facilitator, where we manage the financing and all the paperwork. While the car papers are technically in our names, the vehicles are owned by the individuals,” says Greg.
One can go to the website, and say you want a particular car, the subscription includes the cost of the car, its insurance, registration and tax and IoT device (Cadebra) and it also includes maintenance.
While Zoomcar has an early mover advantage, today there are several car rental platforms like Drivezy, which recently raised $10 million in external funding. However, according to Ken Research, few car rental companies have been able to penetrate into Tier II and Tier III cities. Also, over 70 percent of the car rental market at present is dominated by the unorganised segment.
According to analysts, with Ola and Uber now entering the car rentals market, players like Zoomcar and Drivezy will face stiff competition. One industry expert added that with cab aggregator platforms raising billions of dollars in funding, they have the capital to explore options, penetrate deeper into the market, and fight competition.
Jaspal Singh, Partner at Valoriser Consultants, says that while the car rental market offers a big opportunity in India, it yet is to see the traction seen in other countries. It isn’t about whether the car rental will work, it is about will a company be able to break the market.
Speaking of Zoomcar's future plans, Greg says, "While we look to expand and grow our presence, we are also targeting over a million transactions in this year. Currently, few internet companies are looking at a million transactions in a day. We want to touch that benchmark."