Zoomcar in talks to raise $50 million to fund expansion

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New Delhi/Bengaluru: Self-drive car rental start-up Zoomcar India Pvt. Ltd is in talks to raise $50 million from new and existing investors as it looks to expand to newer cities, two people close to the development said.

Zoomcar’s funding talks have progressed furthest with car and tractor manufacturer Mahindra and Mahindra Ltd (M&M), said one of the two people, both of whom spoke on condition of anonymity.

“They are in advanced talks with Mahindra and Mahindra, while there is interest from two other new investors, too,” the first person said. Mint couldn’t ascertain the identity of the other investors.

Zoomcar also has a partnership with Mahindra and is looking to launch electric cabs in Agra, Dehradun and Chandigarh. The company is currently running a pilot in Mysore, according to a third person familiar with the matter.

Zoomcar declined to comment. Mahindra didn’t respond to emails seeking comment.

Zoomcar already has a strategic investor in Ford Smart Mobility, a unit of Ford Motor Co., which had led an investment round of about $24 million in the company in August 2016.

The Bengaluru-based company was founded in 2012 by Greg Moran and David Back, who quit in May 2015 to return to the US, citing personal reasons. It has so far raised at least $45 million from Ford, Sequoia Capital, Empire Angels, Nokia Growth Partners and others.

Zoomcar India is a fully-owned subsidiary of US-based Zoomcar Inc. and is designed after US-based ZipCar, which allows its users to book a car, make the payment, locate the vehicle and even unlock it with the help of a single app without the help of any executive.

For the year ended March 2017, Zoomcar’s loss narrowed to Rs100.4 crore from Rs101.4 crore in the previous year, according to company documents sourced from data platform Tofler.

Total revenue grew 35% to Rs121.2 crore from Rs89.82 crore in the previous fiscal.

Zoomcar, the largest car rental start-up in India, competes with the likes of Myles and Revv. These companies are trying to attract private owners and dealers to put their cars onto their rental platforms, as they look to expand their fleet.

Zoomcar offers both inter-city and intra-city trips. The intra-city ride-hailing segment is largely dominated by Ola (ANI Technologies Pvt. Ltd) and Uber. Both Ola and Uber have launched services that compete with Zoomcar.

According to Tracxn, a start-up tracker, the 10 biggest car rental start-ups across the globe have together mopped up at least $1.2 billion in institutional funding from marquee investors such as Sequoia Capital, Canaan Partners, Warburg Pincus, Fidelity Growth Partners and Greylock Partners, among others.