Drover, a London-based startup that lets you take out a “car subscription” as an alternative to car ownership, has picked up £5.5 million in seed funding. The round was led by VC firms Cherry Ventures, Partech and BP Ventures (the venture arm of BP), and adds to an earlier £2 million ‘pre-seed’ investment from Version One, and Forward Partners.
Founded by Felix Leuschner (CEO) and Matt Varughese (CTO) in late 2015 and subsequently launched the following January, Drover has built what it describes as a Mobility-as-a-Service platform, giving you access to a car wrapped up in a single monthly subscription. This includes the vehicle itself, insurance, road tax, maintenance and breakdown cover. In addition, users can swap, upgrade or downgrade their car monthly or just cancel altogether, without any long-term commitment or steep upfront payments, says the startup.
Of course, you might think that sounds just like existing car rental offerings, except Drover is designed to be a rolling monthly contract, or for 6 months or longer. In other words, mid to long term rentals, which it sees as a gap in the market and competing more against an outright car purchase or taking credit via a longterm car lease or hire-purchase.
More broadly, Drover says it is hoping to tap into macro trends of the sharing economy, which affords an asset-light and on-demand lifestyle (yes, really!). In terms of how this breaks down into actual customers, Drover’s CEO cites young families who value flexibility as their circumstances change, “life-style driven premium customers” who may want a convertible in the summer and an SUV in the winter, and “convenience-oriented customers” who are drawn to Drover’s all-inclusive and hassle-free package compared to the broken and fragmented user experience of traditional car ownership.
The startup has elected to operate a marketplace model, too, meaning that it doesn’t own any cars or have to shoulder the capital cost of inventory. Instead it currently works with 100 fleet partners to provide a selection of new and used vehicles on its platform. Fleet partners are large rental companies like Europcar, Avis Budget Group and Hertz, car dealership groups, and OEMs, which includes a partnership with BMW Group UK. The buy-in from fleet partners is a new way to monetize vehicles that would otherwise be sitting around idle while depreciating.
“Drover’s marketplace model thereby allows its vehicle partners (rental car companies, dealership groups, OEMs) to list, manage and monetise available vehicle inventory, driving incremental revenue from otherwise under-utilised assets,” Drover’s Leuschner tells me.
Meanwhile, Dover says the new funding will be used to scale the business further and invest in its engineering and product team.
“We at Cherry have the thesis that car ownership is going to change fundamentally in the next few years,” Cherry Ventures founding partner Christian Meermann tells me. “Why should consumers actually own a car or lease it for a long period of 3 or 4 years in the times of sharing economy, desire for high flexibility, and fast innovation cycles in the automotive industry? We believe that Drover’s car subscription service will change the whole automotive industry with Drover’s extremely high flexibility, combined with its broad selection of available cars”.
Meermann says he hopes the Drover team will rapidly grow car subscription in the U.K. and beyond. The key to this, he says, is building great tech to power the supply side of the startup’s marketplace (ie making it cost-effective and scalable for fleet partners to onboard and manage inventory), while at the same time “creating tremendous value” for customers on the demand side.