Invygo, a startup operating in UAE and Saudi Arabia, has raised $10 million in its Series A funding led by MEVP as it works to scale 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 offerings
Invygo offers three kinds of rental services. The short-term rental allows individuals to rent a car for one, three, six, or nine months. The long-term leasing enables renting of a car for 12, 24 or 36 months. And then there is the subscribe-to-own model — which offers brand-new or semi-used — cars on a 24 or 36-month rental period with a start fee that’s much less than the traditional down payment offered at the dealership, the startup says.
Users looking for a short-term rental can go to the website, look at the available cars, and book a rental. On the platform, the company provides car details like model number, year of the make, and kilometers the car has clocked. They can also filter the results by car type, fuel type, transmission type, and color.
Invygo also offers a range of value adds such as doorstep delivery, replacement of car, maintenance, regular insurance, and a round-the-clock helpline.
At the end of the leasing period in the subscribe-to-own model, the customer can pay whatever amount is left to own the car — this amount is specified while making the booking — to purchase the vehicle outright. Founders said that it is working with different financial institutions to provide different options like loans to pay off the last bit of the ballooning amount.
“We’ve split the full payment of the car into three. Normally, you have a massive downpayment of around 20% and then your monthly installments with no way to get out of that commitment. Our starting fee is around 5% and you have the option to cancel your plan at any time without any penalty,” Ganjoo said in a call with TechCrunch.
Invygo takes a cut from the subscription price, but the company didn’t specify how much. It is not profitable yet, the startup said.
Roughly 200 cars are available for subscription in Saudi Arabia and 100 in UAE on the platform on a typical day. The startup works with partners including local car rental services and dealerships to source the cars, it said.
Growing subscribe-to-own service
Ahmed Hussein said that the Invygo’s focus right now is to grow the subscribe-to-own program that it launched in Saudi Arabia earlier this year.
“Currently, subscribe-to-own represents 10% of our overall business. Over time we are aiming to grow it to represent 50% of our business. In Saudi Arabia in particular, we anticipate subscribe-to-own will become 70% of our business there as people want to own an asset and have it in their name, “he said.
The most attractive part about the subscribe-to-own plan is that customers are not obliged to pay a balloon payment to own the car, the startup said. They can cancel the plan at any time without any penalty. What’s more, it is creating an alternative credit score for people based on driver behavior and payment patterns. The startup is using this score to provide financing for the remaining payments themselves or through a network of banks.
Competition and the road ahead
There are a few startups in the region that provide competitive monthly rental options. There is Ekar, which last raised $17.5 in its series B funding in 2019, and Swapp, which has partnered with Uber-owned Careem to offer flexible car rentals on the super app. Invygo believes that its offering is different as they are focusing more on long-term subscriptions and potential ownership of the car.
The founders think that their competitors are traditional institutes that provide car financing. “What we do is to provide you financing in a more accessible way without making any commitment,” they said.
In the next 12 months, Invygo wants to expand its subscriber base in both markets. It also wants to keep an eye out for expansion in markets like Qatar, Egypt, or Pakistan if it sees a substantial opportunity.