Invygo, a startup operating in the United Arab Emirates and Saudi Arabia, has raised $10 million in its MEVP-led Series A funding as it strives to expand 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 offers
Invygo offers three types of rental services. Short-term rental allows individuals to rent a car for one, three, six or nine months. Long-term rental allows you to rent a car for 12, 24 or 36 months. And then there’s the subscription model – which offers new or semi-used cars on a 24 or 36 month lease period with start-up costs far lower than the traditional down payment offered at the dealership, the so-called start-up .
Users looking for a short-term rental can go to the website, view available cars, and book a rental. On the platform, the company provides details about the car, such as the model number, year of manufacture and the kilometers driven by the car. They can also filter results by car type, fuel type, transmission type, and color.
Picture credits: Invygo
Invygo also offers a range of value added services such as home delivery, car replacement, maintenance, regular insurance and a 24 hour helpline.
At the end of the rental period in the subscription model, the customer can pay the remaining amount to own the car – this amount is specified when booking – to purchase the vehicle directly. The founders said they are working with different financial institutions to provide different options, such as loans, to repay the last amount of the inflated amount.
“We’ve split the full payment for the car into three. Normally you have a massive down payment of around 20% and then your monthly installments with no way out of that commitment. Our upfront fee is around 5% and you have the option to cancel your plan at any time without any penalty,” Ganjoo said on a call with TechCrunch.
Invygo takes a discount from the subscription price, but the company did not specify the amount. It’s not profitable yet, the startup said.
About 200 cars are available for subscription in Saudi Arabia and 100 in the United Arab Emirates on the platform during a typical day. The startup is working with partners, including local car rental services and dealerships, to source cars, he said.
Development of the subscription service
Ahmed Hussein said Invygo’s current goal is to expand the subscription program it launched in Saudi Arabia earlier this year.
“Currently, subscription represents 10% of our overall business. Over time, we aim to grow it to represent 50% of our business. In Saudi Arabia in particular, we expect subscription to become 70% of our business there because people want to own an asset and have it in their name,” he said.
The coolest part of the subscription plan is that customers don’t have to pay a lump sum payment to own the car, the startup said. They can cancel the plan at any time without any penalty. Additionally, it creates an alternative credit score for people based on driver behavior and payment habits. The startup uses this score to finance the remaining payments itself or through a network of banks.
Competition and the road ahead
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-owned Careem to offer flexible car rentals on the great app. Invygo thinks its offering is different as they focus more on long-term subscriptions and potential car ownership.
The founders believe that their competitors are traditional auto finance institutes. “What we do is provide you with funding in a more accessible way without making any commitments,” they said.
Over the next 12 months, Invygo wants to expand its subscriber base in both markets. He also wants to keep an eye on expanding into markets like Qatar, Egypt or Pakistan if he sees a substantial opportunity.