ZoomCar Announces $24 Million Series B, Will Focus on Scaling Up

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ZoomCar Announces $24 Million Series B, Will Focus on Scaling Up
Highlights
  • Zoomcar announced a $24 million funding round
  • Last year, it announced a $11 million funding round
  • The company has 2,000 cars, and wants to grow to 25,000

Not a lot of people are probably aware that there are multiple startups that are competing in the self-driven car rental market in India, and that’s something ZoomCar wants to change with its new funding round. The company announced that it has closed Series B funding of $24 million (approximately Rs. 161 crore) led by Ford Smart Mobility, alongside existing investors Sequoia Capital, Nokia Growth Partners (NGP), and Empire Angels.

“We’re thrilled to welcome the Ford team on board for this next phase of growth in the Indian self-drive space,” says ZoomCar CEO Greg Moran. “Customer experience will remain our highest priority as we scale and our relationship with Ford will no doubt help us create a world leading marketplace experience for both our customers and associates.”

“As Ford expands its business to be both an auto and mobility company, we are pursuing a long-term vision to develop services and solutions that make it easier for consumers to move through cities using multiple modes of transportation,” says John Larsen, mobility director, Ford Asia Pacific.

ZoomCar, which is currently operational in seven Indian cities with nearly 2,000 cars, allows you to rent a car to drive yourself, and carry out all the paperwork online, unlike other companies in the category that we’ve come across. It’s easy to book a car, and you can even unlock the door by sending an SMS when you go to collect the car. Last year, it also added doorstep deliveries, so customers no longer need to go collect the cars.

However, that doesn’t mean that growth has been entirely according to plan. In July 2015, ZoomCar raised $11 million (approximately Rs. 70 crore in July 2015) from Sequoia, Empire Angels, and NGP. At the time, ZoomCar CEO Greg Moran told Gadgets 360 (then NDTV Gadgets) that the company – which he said had 1,500 vehicles in six cities, wanted to add 7,000 cars and expand to 15 cities.

With that in mind, how does ZoomCar hope to achieve an even more ambitious target than it talked about last year? Moran is confident it can be met, and says that ZoomCar has been quite successful. He believes additional growth will come from a new model that the company adopted earlier this year – the ZoomCar Associate Program (ZAP).

AirBnB for cars?
“The ZoomCar Associate Program [launched in April] – a financing lease model with ZoomCar – allows you to fractionally share your car,” he adds, “So you can rent it out when you’re not using it.”

The idea of moving away from car ownership to this kind of partial ownership model is something that a lot of leaders in the tech industry have been giving voice to, of late. Even Tesla Motors founder Elon Musk envisions a future where self-driving cars earn money for you when you’re not using them.

What ZoomCar is doing isn't that ambitious for now - it's in line with what Turo, a San Francisco based company, is doing - allowing you to let other people drive your car when it's not in use, for a fee. “You’ll earn a percentage on each booking that your car is used for, the majority cut,” Moran adds, “and you’ll get an earnings report each month.”

The company has been flooded with applications, Moran claims, and says that he believes it will accounts for 75 percent of the total cars in ZoomCar’s fleet by early 2017. “It could even let people get a nicer car than they initially planned,” he adds.

Customer service a focal point
In the funding announcement, Moran mentions that customer experience will remain the highest priority for ZoomCar as it scales ZAP. However, take a look online and you will find a large number of people complaining about the company. Recently, there was a long negative experience shared on a forum, which talked of breakdowns, poor service, and unpaid refunds. Moran took to the forum to defend ZoomCar, though his approach might be viewed as undiplomatic. He however believes that people aren’t hearing both sides of the story.

“We have a very high velocity of repeat customers, so we are doing something right,” he says. “You’re always going to face negative reviews, but you have to understand the veracity of the claims, the back and forth. You have to understand what went on.”

On MouthShut, ZoomCar has a rating of 29 percent, with 62 percent 1-star ratings. This is across just 182 ratings. On Consumer Complaints the number is just 35 percent, but again across a small base of 120 complaints. At the same time, we found plenty of positive comments on Twitter as well.

Based on this, it’s hard to say how successful the overall customer experience, though as far as those users are concerned, there is definitely room for improvement. Moran says that the company will continue to work on improving its customer care experience. “One of the big things to watch for is the different inflection points as you scale,” he says. “The challenge when you’ve got 1,000 cars is different from when you’ve got 2,000, and when you’ve got 10,000, and we’ve got to be careful as we grow.”

“We’re going to grow very carefully, and we’re not just throwing people at the problem,” he adds. “We want to use technology to automate more processes and reduce human intervention, and that will lead to better results as we scale.”

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