Funding Setbacks, M&As And Pivots: Drivezy’s Redemption Song




Funding Setbacks, M&As And Pivots: Drivezy’s Redemption Song

The hardest length for automobile-sharing startup Drivezy got here whilst it overlooked a massive round of investment remaining 12 months

To get better, founders determined to conserve coins and gave up salaries for a 12 months from March 2018

After bouncing back, Drivezy is close to finalising a major funding round in early April 2020

After four years of setting out, automobile sharing startup Drivezy went thru its toughest phase, regularly called ‘valley of dying’, in reference to the section whilst startups find it extremely hard to cover the bad coins flow, normally going on inside the seed stage. The vehicle-sharing startup did nearly the entirety, such as founders sacrificing their salaries, multiple pivots, searching out mergers and acquisitions deals and rethinking the business version, to decrease coins burn pretty considerably.

In March 2019, SoftBank and ecommerce large Amazon were reportedly in talks to lead a $100 Mn (INR 690 Cr) equity financing spherical within the startup for Series C fundraiser. However, the Bengaluru-based totally startup turned into unable to close the spherical. The multiple investors that Drivezy turned into in talks with had said that the sector in India continues to be at a nascent level with no clear winner in the intervening time.

“The SoftBank deal in March 2019 changed into a Quasi term sheet. Since they made no investments in India in 2019, we break up our one hundred Mn round into 2 rounds,” stated Ashwarya Pratap Singh, cofounder, Drivezy.

This brought about the startup to have early talks with several gamers. According to cft sources, the startup changed into approached by using Bounce, Zoomcar for one-of-a-kind mergers and acquisition proposals. “However, we reached that level where we realised what we had been doing turned into full-size. Later we proven that. We didn’t pass in advance with the M&A proposals,” Singh stated.

Renewed Focus And Ideation

After that incident, Drivezy mainly focussed on robust unit economics and fundamentals and someway locating ways to lessen burn and come to be operationally extra efficient. As a result, the founders started exploring options that might help them increase market percentage which on the time was around 35%.

Then got here the second phase, which became the concept to franchise current places. That turned into the proper thing to do to reduce down the fee of growth and decrease all operational expenses to 0. In this version, the micro-marketers took manipulate of the nearby devices and operational challenges like downtime. “By December 2019 we had been capable of contain the value by way of greater than 30% and total sales multiplied 2.8x,” Singh said.

The founders also determined that it was truthful to not take a earnings and preserve cash. So from March 2018 to March 2019, they determined not to draw their salaries and come down on the value-reducing side. That helped our burn lower pretty extensively.

Drivezy changed into based in April 2015 via Ashwarya Pratap Singh and his pals Hemant Kumar Sah, Vasant Verma, Amit Sahu, Abhishek Mahajan as a car-sharing service after realising the potential of automobile sharing in India. Today, the startup has a fleet of over 17K cars, bikes and scooters, covering more than 250 places in eleven cities. In 2019, Drivezy began vehicle-sharing offerings in San Francisco, turning into the primary and handiest Indian car sharing platform to begin operations within the USA. According to cft assets, the startup will be last a main spherical in early April 2020.

Funding Setbacks, M&A Rejections And Pivots: Drivezy’s Redemption Song

Today, Drivezy has 23 franchise places in 5 towns and that proper now constitutes 32% of overall monthly revenue coming in from that unique space. It goals to transform all existing places into franchise-operated gadgets via the cease of the 12 months. The startup has also partnered with OYO to revel in a substantial advantage that will assist the organisation consolidate marketplace percentage to 50% in the coming months.

Failed Experiments And Learnings

Drivezy’s journey is going returned to 2014 when Ashwarya and his friends realised that Indians, children, especially, were now not looking for ownership styles. They are inclined to pay for on-demand products along with quick time period and long term leases. Average center-elegance households who ought to have enough money vehicles additionally had -wheelers. “That was a surprising locating. We realised that families that had a Maruti 800 or Zen would not use it for shorter distances, within 10 Km. When the distance was greater than that or involved greater than two humans, a car became preferred. Car is that way still a set hobby,” he said.

Additionally, once a patron uses two-wheelers extra than five times, the aspiration for automobile kicks in. And in towns with erratic weather situations and pollution vehicles are often rented out. This led to the idea of JustRide (Drivezy became earlier called JustRide). The founders shared a commonplace love for entrepreneurship and labored difficult for a yr to refine the idea earlier than setting out operations in 2015.

There was additionally another pivotal incident that caused the idea of JustRide. Ashwarya’s brand-new Ford Figo met with an unfortunate twist of fate and that is while he saw the possibility for vehicle rentals in India. “I barely used my vehicle for more than an hour an afternoon and I spent a great a part of my profits to keep the automobile. The twist of fate made me comprehend that numerous humans my age is probably going thru the equal conundrum,” he stated.

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Drivezy (previously JustRide) was to start with underneath the aggregator model wherein humans ought to lease motors and bikes from people round them. “When we released JustRide in 2015, the concept of carsharing in India become not anything more than a laughable idea,” he said. According to the startup, turning in ownership of something as privy as your automobile to a stranger even for a few hours, not to mention days at a stretch become preposterous again then.

In November 2015, but, the startup raised investment of $2 Mn. Before that, it had raised an undisclosed amount of angel investment from industry veterans like Alok Mittal, Zishaan Hayath, Niraj Singh, Nikunj Jain, among others in August 2015.

The startup then focused on building a self-force automobile apartment provider and have been a success to an quantity. The platform became offered out almost each weekend however including new automobiles turned into tough. As the funds had been restricted, buying motors was out of the question. So, the startup had leased round 250 cars but that too proved steeply-priced.

In March 2016, the startup raised $400K in Pre-Series A spherical of funding from a group of angel investors. Additionally, Google decided on Justride for its Launchpad accelerator and the enterprise changed into once more decided on by way of Y Combinator for summer time 2016.

Funding Setbacks, M&A Rejections And Pivots: Drivezy’s Redemption Song

The same year, the startup toyed with the concept of constructing a market where individual proprietors ought to list their idle motors. The platform became rolled out in Bangalore, Mumbai and Pune. “A lot of proprietors we met have been unwilling to trust strangers with their vehicles. Addressing the mental block took us an excellent six months but we trudged alongside. Now of path, with the sharing financial system being at the vanguard, thanks to the efforts of groups like Airbnb, Uber and Ola, humans are a great deal greater comfortable in sharing their automobiles with strangers,” Singh told us.

That’s whilst the employer shifted to a car-sharing market from an aggregator-based model. The marketplace version was like Airbnb of motors, developing on each the demand and deliver facet. In 2017, Justride rebranded to Drivezy and started out offering two-wheelers similarly to cars.

In November 2018, Drivezy raised $20 Mn in Series B, led via current investor Das Capital, and unfold operations to extra than forty places in 7 cities in India. Drivezy secured $100 Mn in an asset financing deal using which the agency deliberate to induct over 50K vehicles. The funds had been to be used over three years, thru Harbourfront Capital, a Special Purpose Vehicle. Additionally, the financing mechanism became handled via Tokyo-based Anypay Inc., an early investor in Drivezy.

Ride To The Right Fit

Drivezy nowadays follows an asset-mild business model that blends multiple deliver channels to source belongings. Drivezy’s middle business involves generating call for for the motors indexed on its platform. For this, the organisation prices a 15-25% platform take charge. The enterprise works with man or woman P2P proprietors, asset maintaining organizations, NBFC’s and automobile dealerships to enlist automobiles.

The peer-to-peer deliver channel money owed for extra than 70% of the automobiles and round 29% of the two-wheelers (bikes and scooters) listed at the platform. Individual owners and commercial players like car dealerships enlist idle inventory on a sales-sharing foundation. Through the asset financing channel, the business enterprise companions with institutional buyers who buy and list assets on the company’s platform via unique-reason vehicles (SPV’s).

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For an funding of $100K, the franchisee manages the unit for a tenure of 3 years. During this period, Drivezy leases assets well worth $590K to the unit. The franchise generates sales via renting the assets to clients and handles all operations and associated manpower. The franchisee also will pay a revenue share to Drivezy for each a success reserving. At the end of the three-year tenure, the franchisee is entitled to the salvage fee of the property, publish appropriate depreciation.

According to a World Bank 2018 record, on average $five.Five is spent each day by means of a median Indian and 33 % of that spend is on mobility desires which covers 6 journeys every day, consisting of last-mile delivery. “This is while we realised that with leases, we ought to bring down ordinary spending on day by day travel by using 30%. We concept of a extra hassle to remedy. We extended to 2-wheelers from 2017,” Singh stated.

Understanding the unit economics, accepting the fault and revisiting the business version, helped the business enterprise get thru the hard time and these days the organization has an aspect over its competitors who conventionally rely upon a unmarried channel to listing cars on their respective systems.



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