Taking a leaf out of Luxe, a California-based startup, Ashok Shastry, along with his father Ram (Rahm) Shastry, founded DriveU, as a platform that allows car owners to rent drivers, in 2015. Fast forward to 2022, when the father stepped back from daily operations, and the son now heads the company, the company wants to become a one-stop solution for all car-related needs.
DriveU is rolling out car servicing, insurance services and several others to its customer base of around 0.65 million. The Bengaluru-based company adds about 15,000-20,000 paying customers each month. Helped by the increasing demand, its driver partner base also continues to increase. DriveU currently has over 65,000 drivers and adds around 1,000-2,000 each month.
About 70% of its driver partners are part-timers while the rest are employed full-time by the company. Drivers who typically work with the company for about 8-12 hours a day, earn around Rs 35,000 to Rs 40,000 from the platform. CEO Shastry says that was much higher than what the Rs 25,000 they would otherwise earn on Ola and Uber.
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“The ultimate aim is to become the Urban Company for car owners and the market is only growing as Indians become more aspirational. Interestingly, we’ve seen that as the cab service quality deteriorates, the demand for DriveU’s offerings increases,” Shastry said.
Riding on that, DriveU would likely end FY23 with a revenue of Rs 25 crore, more than double of what it earned in the previous fiscal year, thanks to the 20% price hikes it passed on to customers. While the company would still be loss making in the year, at around Rs 15 crore, it hopes to shift gears and turn profitable in FY24, he added.
DriveU’s average ticket size was around Rs 600, which it said will increase as the company entered newer categories. That foray will also help it lower the customer acquisition cost (CAC), which currently stands at about Rs 200. Apart from the take rate of about 20% per transaction, DriveU also earns, in small amounts, from the one-time registration fees it collects from drivers wanting to hop on to the platform. About 75% of the company’s revenue comes from the B2C while B2B brings in the rest. And under B2C, drunk customers not fit to drive back home is one of the biggest use cases, accounting for about 25% of DriveU’s revenues.
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The company is currently present in 12 cities but the top metro cities account for about 70% of the company’s total sales. DriveU has so far raised around $5.9 million in funding mostly from a clutch of angel investors but going forward, it will tap more institutional investors and raise money to the tune of $20 million or more to expand operations and increase brand presence, or for a “growth round”.
“Letting users know that there are other things that DriveU offers has been the biggest challenge for us as our marketing spends are near zero,” Shastry concluded.