Invygo, a startup operating in the United Arab Emirates and Saudi Arabia, has raised $10 million in its MEVP-led Series A funding to expand its rental car service in the region.
The Middle East-based startup, founded in 2019 by Eslam Ahmed Hussein and Pulkit Ganjoo, has raised $14.3 million so far. Al Rajhi Partners, Arab Bank, Amana Capital and Palm Drive Capital as well as existing backers Signal Peak Ventures and Knollwood Investment Advisory also participated in the new round.
Car subscription offers
Invygo offers three types of rental services. Short-term rental allows private individuals to rent a car for one, three, six or nine months. Long-term leasing allows you to rent a car for 12, 24 or 36 months. And then there’s the subscription-to-own model, which offers brand-new or semi-used cars for 24 or 36-month leases with an entry fee that’s much less than the traditional down payment offered at the dealership, Startup says.
Users looking for a short term rental can go to the website, view the available cars and book a rental. The company provides vehicle details such as model number, year of construction and kilometers driven on the platform. You can also filter the results by vehicle type, fuel type, transmission type and color.
Invygo also offers a range of additional services such as doorstep delivery, replacement vehicles, maintenance, regular insurance and a 24/7 hotline.
At the end of the lease period in the Subscribe-to-Own model, the customer can pay the remaining amount for owning the car – this amount is specified at the time of booking – to purchase the vehicle directly. The founders said they are working with different financial institutions to offer different options like loans to repay the last part of the skyrocketing amount.
“We split the full payment for the car into three parts. Typically you have a massive down payment of around 20% and then your monthly payments without ever getting out of that commitment. Our entry fee is around 5% and you have the option to cancel your plan at any time without penalty,” Ganjoo said in a conversation with TechCrunch.
Invygo is taking a cut in the subscription price, but the company didn’t specify how much. It’s not profitable yet, the startup said.
On a typical day, around 200 cars in Saudi Arabia and 100 in the United Arab Emirates are available for subscription on the platform. The startup is working with partners including local car rental companies and dealers to source the cars, it said.
Growing subscription-to-own service
Ahmed Hussein said that Invygo’s current focus is to expand the subscribe-to-own program it launched in Saudi Arabia earlier this year.
“Currently Subscribe-to-Own accounts for 10% of our total business. Over time we aim to expand it to 50% of our business. In Saudi Arabia in particular, we expect subscription-to-own will be 70% of our business there because people own an asset and want it on their behalf,” he said.
What’s most appealing about the subscribe-to-own plan is that customers aren’t required to make a balloon payment to own the car, the startup said. You can cancel the plan at any time without penalty. Additionally, it creates an alternative credit score for people based on driver behavior and payment patterns. With this score, the startup finances the remaining payments itself or through a network of banks.
Competition and the way forward
There are a few startups in the area that offer competitive monthly rental options. There’s Ekar, which last raised $17.5 in its Series B funding in 2019, and Swapp, which has partnered with Uber’s Careem to offer flexible rental cars through the super app. Invygo believes their offering is different as they focus more on long-term subscriptions and potential ownership of the car.
The founders see their competitors as traditional institutions that offer car financing. “What we’re doing is providing you with funding in a more accessible way without making a commitment,” they said.
Invygo plans to expand its subscriber base in both markets over the next 12 months. It also wants to keep an eye on expansion into markets like Qatar, Egypt or Pakistan if it sees a significant opportunity.