SAIF may invest in car rental company ZoomCar

MUMBAI: Multi-stage investment firm SAIF Partners may lead a $30-million (Rs 190 crore) financing round in Bengaluru-based ZoomCar, a self-drive car rental venture backed by economist and former US treasury secretary Larry Summers, sources close to the development told TOI.
ZoomCar had raised an $8-million series A round in October last year from venture capital fund Sequoia Capital and other investors, including former Infosys board member TV Mohandas Pai and Manipal Group's Abhay Jain.The new round will see existing investors participate, sources said.
ZoomCar, founded by two American college mates Greg Moran and David Back, competes with Myles, run by Carzonrent, and Car Club, which is backed by US-based investor Berggruen Holdings.
Moran, co-founder & CEO, ZoomCar, without giving any details on the fund-raise, said the company plans to use the fresh capital to expand into newer cities, grow its fleet size and build the team. He, however, declined to name any investors and amount of capital being raised by the two-year-old startup.
An email sent to SAIF Partners by TOI did not elicit a response till the time of going to press. ZoomCar's other investors include Basset Investment Group, FundersClub and Empire Angels.
The car rental startup is currently operational across Bengaluru, Delhi and Pune with 1,000 cars, ranging from Honda Amaze to Tata Nano, on the roads. It plans to launch in Chennai, Hyderabad and Mumbai soon and enter some tier I and tier II cities going forward, Moran said. "We may look to expand into 8-10 cities by the end of the year," he said. Without giving any specific number, Moran said ZoomCar's revenue had grown five-to-six-times over the past few months.
An investor from an early-stage venture fund who did not want to be named said that self-drive works well as a weekend business but it is still unclear as to how the economics work given its asset-heavy business model. Also, fleet utilization will be a challenge on weekdays, he said. The likes of Uber and Ola, which facilitate travel within cities, work on an asset-light model wherein they do not own any cars but work like a marketplace connecting drivers to riders.