Virtuo raises $96M for its streamlined take on car rentals
Car ownership has become pricey and untenable in many towns and cities in Europe: between congestion charges to reduce emissions, parking fees, and traffic, many consumers opt instead to use public transportation, two wheels, cabs or their own legs to get around. To add to that mix for longer journeys, today a startup that's building a new take on car rental is announcing some funding to scale out its service.
Virtuo, a Paris-based startup that has built a very streamlined, all-digital approach for those who want to rent a car for a few days, or up to a few months, has picked up $96 million, money that it will be using to invest in its tech; to expand to more markets beyond France (12 cities including Paris), UK (London, Manchester and Edinburgh) and Spain (Barcelona, Madrid and Valencia); to add in a tier for business users; and to add more vehicles into the mix. The company currently has 150,000 active users, and grew 100% (2x) this last year, said co-founder Karim Kaddoura.
The rise of the staycation' boosted our business," he said. And we saw a surge in the average duration of a rental."
All-digital and streamlined in the case of Virtuo means exactly that: currently there are only two models to choose from outside of France - either a Mercedes Benz A-Class or a Mercedes GLA SUV - but there is no paperwork, with everything handled through an app, and you have the option of getting a car delivered to and picked up from you, meaning no lines in airports or hotel garages, and you get a virtual key to operate it.
The funding is coming in the form of a $60 million Series C and $36 million in asset financing. AXA Venture Partners, the strategic investment arm of the insurance giant, led the equity round, with new investors Bpifrance, Alpha Intelligence Capital and H14; and previous backers Balderton Capital, Iris Capital and Raise Ventures, also participating. Natixis, members of Banque Populaire and Caisse d'Epargne Group handled the asset financing.
While companies like Zipcar, Getaround or Turo (which has, interestingly acquired Virtuo as a Google search, and even writes Virtuo" on its search resultshave made it easy to rent cars for a day or as little as a few hours in cities, Virtuo provides a modern take on the more traditional use case for renting cars: when you need a vehicle for longer journeys that can take up to several days, and specifically in the case of Virtuo between one and 90 days.
As Kaddoura - who co-founded Virtuo with Thibault Chassagne - notes, traditional car rental companies serving that market are typically still pretty rigid with how they do things.
Even if you initiate a process online, there is usually still paperwork that needs to be filled out in person; and you need to go to a rental hub - in an airport or a hotel, but not necessarily in your neighborhood - to pick up the car. The process for checking them out and in can also be tedious and the costs for all of this quite high, with many moments where the rental company might upsell you to make a basic price suddenly quite premium.
The car rental industry itself is huge but consumers in it are completely underserved," Kaddoura said.
And on the other side of the equation, there is a growing case for not owning a car if you live in a city or large town.
Our aha-moment was when we looked into the numbers," he said. In Paris, there are 700,000 cars parked in the streets, with twice that in London. The average European spends 7,500 per car per year when you calculate parking, insurance, damage, taxes, and the price of the car averaged out. That's 5 billion spent by Parisians, yet those cars are idle 95% of the time. Forget the financial part and look at the impact cars have on our lives and livelihoods, occupying 50% of our urban space." It's all the more ironic, Kaddoura noted, given that his father is a car dealer who completely expected his son to go into business with him one day.
It's partly because of this environmental angle that Virtuo is also going to be expanding its fleet to include more electric vehicles: it already inludes Hyundai's Kona Electric vehicles in its fleets in France, and the plan is to expand to have 50% of its fleet electrified by 2025, with 100% of it covered by electric vehicles by 2030. It also has been offsetting 100% of its carbon footprint since January of this year.
The funding round being announced today comes after what has been a challenging period for any company with a business model predicated on people leaving their homes to do things, not least to do things in spaces others have recently occupied. That is to say, Covid-19 has encourage people to stay home and socially distance, so a car rental - which encourages travel and specifically travel in a vehicle someone else has been in - may be a challenging sell.
Although revenues grew in 2020, it's perhaps partly because of the bigger market conditions that Virtuo somewhat slowed down its roll. When we covered its last round of funding, in 2019, the company said the money would be used to expand to Spain and Germany, and more markets in the UK, that year, and it was also live in Belgium. Now, Kaddoura confirms that now Germany will only be coming online in 2022. Milan will be as soon as later this month, he said, with the bigger plan being to be live in 10 countries by 2025. (And Belgium is no longer online, it seems.)
Added to its own scaling ambitions, however, the opportunity that Virtuo is targeting is not one that others have ignored. In addition to others like Getaround (which recently got a big round), Drover out of the UK, Zipcar and Turo providing more streamlined rental and car-sharing experiences, recently Uber also expanded a car rental offering in partnership with a third party called CarTrawler. This is not a fully integrated service like Virtuo's, nor a peer-to-peer offering like Getaround, but something that appears to aggregate and search across the same traditional car rental companies that Virtuo is competing against. That makes it, potentially, a direct competitor.
We are very proud and excited to be part of the Virtuo adventure alongside the Virtuo team, led by Karim and Thibault," said Benoit Fosseprez, general partner at AXA Venture Partners, in a statement. Virtuo has quickly become a tech leader disrupting the car rental space, with a clear long-term vision and strong ambitions for growth into new markets. We have been impressed by the Virtuo team and look forward to working closely together on the next stages of their development. With this investment in Virtuo, the first for our Growth II fund, we are confirming our ambition in the tech-led high growth companies segment."
We are delighted to support Virtuo in its development," said Caroline Lebel of Bpifrance's Large Venture fund, in a separate statement. The company offers a true alternative to owning private cars for city dwellers who wish to use more sustainable shared mobility solutions. Born in the digital era, Virtuo's 100% digital experience is backed by powerful technology and artificial intelligence to optimize its operations. We are convinced that the mobility of tomorrow must be built with strong technology at its core, addressing new behaviors and with the freedom of choice of a multimodal offer."