Car rental service, Zoomcar, which lets users geolocate a car and drive off through an app booking, has raised $24 million in fresh funding aimed at boosting the company's new "marketplace" model that lets users enlist their own idle cars on its platform and share in the profit.
The new funding round was led by Ford Smart Mobility LLC, a subsidiary of Ford Motor Co, along with existing investors Sequoia Capital, Nokia Growth Partners and Empire Angels. With the latest fundraise, Zoomcar has raised a total of $46 million in capital, said Greg Moran, Co-Founder and CEO, Zoomcar.
The new funding, a Series B round, will help boost the company's tech platform that allows people to rent cars, and also purchase and enlist their own cars on the platform to share the profit on a monthly basis, a new model the company launched under its "Zoomcar Associate Program" earlier this year. Under the program, its associates can initially earn 20 per cent to 30 per cent of the revenues, and overtime Zoomcar expects associates to earn up to 80 per cent of the revenues from the rentals, he said.
Zoomcar is banking on a partnership with Ford that will help push its new model, said Moran. Ford has been Zoomcar's largest supplier of vehicles such as Ford Figo and Ecosport. Under the new model people listing their own cars won't be limited to just Ford cars, said Moran.
While car rental services such as Hertz are struggling overseas financially in part because of expensive fleets, Zoomcar doesn't quite see Uber and Ola as a threat in India because its services are aimed at longer outstation distances, compared to cabs which offer cabs for shorter distances, said Moran.
"They are totally different use cases," said Moran. "Our bookings are for days compared to the average 10 to 12 kilometres by cabs."
Zoomcar hopes to fill the void in the car rental space in India by offering them a localised service and business model, said Moran.
Asked if car rental services are an alien concept in India, Moran said people in India aren't new to borrowing cars.
"People have been using their [relative's] cars and self-driving for a long time," said Moran, adding the service is just a professionalised product.
Bengaluru-based Zoomcar, founded in 2013, operates in seven cities including Bangalore, Pune, Chandigarh, Chennai, Hyderabad, Mumbai and Delhi NCR. It plans to expand internationally and enter Africa in the coming years, said Moran.
While Moran wouldn't disclose sales figures, he said the company has seen robust growth, and hopes the marketplace model will contribute up to 75 per cent of its overall fleet of cars and its tech platform will help it expand its current fleet of 2,000 cars ten-fold to up to 25,000 cars across 25 cities by 2018. It also hopes to expand its airport car services across the current cities.