Kyte wants to build the foundation for autonomous rental car delivery

Kyte, a fleet-logistics platform that allows customers to order rental cars delivered right to their doors, has raised a $30 million Series A round. In the short term, the startup wants to expand into new cities, countries and verticals, but the long-term goal is to build out a platform that can deliver vehicles via teleoperation or an autonomous system. 

“We need the foundation of a fleet operating system and a technology layer that is able to manage both the fleet now as well as a fleet of teleoperated vehicles or autonomous vehicles in the future,” Nikolaus Volk, co-founder of Kyte, told TechCrunch. “Part of that is really building the data platform that includes sensing and telematics capabilities, and really supports teleoperated launches in the future.”

To be clear, Kyte isn’t working on the software or hardware that will enable teleoperated or autonomous car delivery — there are plenty of companies already doing that, and Kyte says it’s in advanced conversations with multiple companies in the space with the goal of partnering on pilot deployments. Rather, it wants to ensure its fleet management system can connect to and enable future technologies. Kyte plans to begin testing out teleoperated delivery in 2022 and bring a small subset of the fleet to one or two markets by 2023. 

But first, the company has to set up the commercial use case, drive unit economics and enhance the customer experience for rental car deliveries before it jumps into the “sexy” part of the business model. 

Currently, Kyte operates in nine U.S. cities, including Boston, Chicago, Los Angeles, Miami, New York City, Philadelphia, San Francisco, Seattle and Washington, D.C. At the start of October, the startup expanded beyond Manhattan and into Brooklyn

Kyte positions itself as the solution for all urban trips that are longer than general ride hailing. About 80% of its trips instantly leave the city environment for a few days, so long weekend trips are Kyte’s bread and butter. But as the company eyes expansion into more cities and, by next year, more countries, it also looks to expand its use cases. 

Ludwig Schoenack, one of Kyte’s three co-founders, told TechCrunch the startup is pursuing a business travel vertical, wherein customers arriving in a new city might arrange for their rental car to meet them at their Airbnb or hotel. Kyte is also doubling down on longer-term rentals, or rather subscriptions of up to 12 months. 

The car subscription model is quickly cropping up in many markets, and in a few cases, like U.K.-based Onto, it revolves around providing alternative access to electric vehicles. Schoenack and Volk say that because they are very customer-centric, their main goal is not to necessarily drive EV adoption, but rather to listen to what the customer needs. If the majority of Kyte users are Americans taking weekend trips outside the city, it stands to reason that range anxiety, warranted or not, is something the company has to keep in mind.

Limited supply of EVs is another potential hurdle for introducing more EVs to the platform. Kyte says it doesn’t yet offer electric in most of its markets, although almost all have some version of a hybrid car. 

“We look at our platform as the most ready to adapt to changing customer needs,” said Shoenack. 

Kyte’s fleet is somewhat limited to the cars its partners are stocking. The company generally works with rental companies or companies with large commercial fleets that are being underutilized and gives them a second life on its platform. Kyte is beginning to work more directly with manufacturers, as well, both leasing and purchasing cars through a leasing company it controls. 

All Kyte vehicles, third-party and leased or bought from OEMs, live on the company’s “cloud parking infrastructure,” which are essentially like dark stores for car rentals — cheap pieces of real estate tucked away in urban environments that are optimized for delivery operations. At the moment, Kyte has about one dark parking lot per city, with the exception of larger cities like NYC and LA, in which Kyte has multiple lots. 

“It’s a more future-proof model compared to anything else because there will always be space that’s hidden away from the consumer,” said Shoenack. 

The lots also don’t have storefronts or branding, which makes for a pure delivery play that “allows us to arbitrage costs,” Shoenack continued.

Because the Kyte model saves on overhead costs, the startup says it’s able to offer services cheaper than the ZipCars and Hertzes of the world, which has resulted in profitable market operations. 

“We can’t disclose exact revenue, but we can share that Kyte makes seven-figure monthly revenues, and this figure grew by about 10x last year,” said Volk. 

Heavy investment into its technology, product development and accelerated growth has led the company to raise the additional funding in this round.

The latest funding round, which follows a $9 million seed round earlier this year, brings Kyte’s total funding to more than $40 million. The Series A was led by Park West Asset Management and Sterling Road.