Invygo, a startup operating in the UAE and Saudi Arabia, has raised $10 million in its Series A funding led by MEVP as it works to scale up its car rental service in the region.
The Middle East-based startup, founded by Eslam Ahmed Hussein and Pulkit Ganjoo in 2019, has raised $14.3 million to date. Al Rajhi Partners, Arab Bank, Amana Capital and Palm Drive Capital and existing backers Signal Peak Ventures and Knollwood Investment Advisory also participated in the new round.
Car subscription offer
Invygo offers three types of rental services. The short-term rental allows individuals to rent a car for one, three, six or nine months. The long-term lease makes it possible to rent a car for 12, 24 or 36 months. And then there’s the ‘subscribe-to-own’ model – which offers brand new or semi-used cars with a 24 or 36 month rental period with a starting rate much lower than the traditional deposit offered at the dealership, the startup says.
Users looking for a short term rental can go to the website, view the available cars and book a rental car. On the platform, the company provides details about the car, such as the model number, the year of manufacture and the kilometers driven. They can also filter the results by car type, fuel type, transmission type and color.
Invygo also offers a range of value-added services such as door-to-door delivery, car replacement, maintenance, regular insurance and a 24-hour helpline.
At the end of the lease term in the ‘subscribe-to-own’ model, the customer can pay the remaining amount to own the car – this amount will be specified when making the booking – to buy the vehicle directly. The founders said it has partnered with various financial institutions to offer various options, such as loans to pay off the last bit of the rising amount.
“We split the full payment for the car in three. Normally you will have a huge deposit of about 20% and then your monthly installments without being able to get under that commitment. Our starting rate is about 5% and you have the option to cancel your subscription at any time without penalty,” Ganjoo said in an interview with australiabusinessblog.com.
Invygo takes a discount on the subscription price, but the company doesn’t specify how much. It is not yet profitable, according to the startup.
On a normal day, there are about 200 cars available for subscriptions in Saudi Arabia and 100 in the UAE on the platform. The startup is working with partners including local car rental services and dealers to buy the cars, it said.
Growing subscription-to-own service
Ahmed Hussein said the Invygo’s focus is now on expanding the subscribe-to-own program it launched in Saudi Arabia earlier this year.
“Currently, subscribe-to-own represents 10% of our total business. Over time, we aim to grow it to represent 50% of our business. In Saudi Arabia in particular, we expect ‘subscribe-to-own’ to become 70% of our business there, as people want to own assets and have it in their name,” he said.
The most appealing thing about the proprietary subscription is that customers are not required to pay a balloon payment to own the car, the startup said. They can cancel the plan at any time without penalty. In addition, it creates an alternative credit score for people based on driving habits and payment patterns. The startup uses this score to fund the remaining payments itself or through a network of banks.
Competition and the road ahead
There are a few startups in the area that offer competitive monthly rental options. There is Ekar, who was last brought up $17.5 in its Series B funding in 2019, and exchange, which has partnered with Uber-owned Careem to offer flexible car rentals through its super app. Invygo believes the offerings are different, as they focus more on long-term subscriptions and possible car ownership.
The founders think that their competitors are traditional institutions that provide car financing. “What we’re doing is providing you with financing in a more accessible way without any commitment,” they said.
Over the next 12 months, Invygo plans to expand its subscriber base in both markets. It also wants to keep an eye on expansion in markets such as Qatar, Egypt or Pakistan if it sees a substantial opportunity.