Started by an overseas duo, Zoomcar, a Bengaluru-based startup holds the distinction of being the country’s first self drive car rental company.
Started by an overseas duo, Zoomcar, a Bengaluru-based startup holds the distinction of being the country’s first self drive car rental company. Greg Moran and David Back moved to India from USA to launch Zoomcar in 2013 after realising the transportation problems faced by people in the cities. “I was focused on city development given the trajectory India is seeing and it made sense to focus on problems here and transport emerged as one of the major problems faced by the people here,” says Moran.
According to Moran, less than 15% of the people in cities own a car and that’s how he came up with hyperlocal on demand rental service which can give people the benefit of access to a car without even owning it. “So you save congestion, time and money. It’s a win-win for the cities and also for the individuals. Moreover countries like China and Europe already have similar models and there was nothing in India and that’s why we wanted to pursue it rigorously,” adds Moran.
After carrying out extensive ground research and collecting feedback from various cities, Moran and Back eventually launched their operations in 2013 and raised $200,000 from angel investor Raj Kumar Elango, $30,000 angel funding from former US treasury secretary Larry Summers and $215,000 from Empire Angels New York, Lady Barbara Judge among other angel investors. Followed by which it raised $8 million from Sequoia Capital, with participation from new investors—former Infosys CFO Mohandas Pai and Manipal Group head of corporate affairs, Abhay Jain. This year it again raised $11 million from Sequoia Capital, Empire Angels and NGP, adding to a total of $22 million.
They first launched their operations in Bangalore and have grown from 7 cars initially to a fleet of 2,000 cars. This year in February, the company partnered with Tata Motors and added 50 Nano cars to its fleet. “Our largest city is Bangalore in terms of cars, nearly half of our fleet is based out of Bangalore,” adds Moran.
According to Moran, Zoomcar has grown 5x this year and now provides services in six cities including Delhi, Mumbai,Hyderabad, Chennai and Pune and soon will be expanding to Kolkata. “We will be entering into Tier 2 cities and will certainly expand to 15-20 markets in next 9-10 months,” adds Moran. On being asked about global expansion plans, Moran said that it is something that has crossed his mind and will be something they would focus on for the longer term. However earlier this year, the company saw the resignation of its co-founder David Back stating personal reasons.
However Moran mentions that starting a business in India can get really hectic especially if you are an outsider. “Initially it is quite challenging to set up any business in India particularly if you are from abroad. There are a lot of procedures and unnecessary hoops involved in starting up a business here. Baseline license and registration was extremely challenging and it collectively took almost a year to get through most of the processes even after we started operations,” says Moran.
According to Ken Research, the Indian car rental market revenues will grow grow at a considerable CAGR rate and is expected to touch R800 billion by 2019. In terms of on-demand car rental space, Uber and Ola remains to be unbeatable players in the market. However, many players exploring the self-drive car rental space like Revv, Myles and Carzonrent. “There are few small guys out there however we own vast majority of the market as we focus entirely on providing self driving car rental services. Other players like Myles and Carzonrent have a different approach to the business, they have always tried to venture into other segments. Most of them don’t even have an app and that gives us an edge over the other players. Our focus has always been on technology, product and data and I believe these three factors create a better customer experience and brand,” says Moran.
Moran says that more that 50% of their bookings are done through the app and the launch of an app has certainly helped him escalate his business. “Having said that you always have a subset of customers who would like to compare hotels and prices and it is a lot easier to do that on a desktop than your mobile phones,” adds Moran. In terms of challenges, hiring is one of the challenges faced by the company, according to Moran. “Just like any other startup hiring is one of the biggest challenges that we face. Finding great talent align with your vision is something you need to focus on a lot. Hiring is never easy. From a business perspective as you scale and grow you have to maintain the customer experience and have to make sure it is actually getting better. The journey has to improve and you have to really focus and invest to make sure it improves,” says Moran.