DriveU raises $1 million from Unitus Seed Fund, Silicon Valley angel investors

Bengaluru: At a time when ride hailing services such as Ola and Uber are rolling out offers to dissuade consumers from using personal vehicles, DriveU, an on-demand driver provider launched by an early backer of TaxiForSure, has raised about $1 million from Unitus Seed Fund and undisclosed angel investors from the Silicon Valley, said co-founder and chief executive Rahm Shastry.

Interestingly, to thrive as a business, DriveU will need car owners to frequently use their vehicles, which is in contrast to the so-called unicorns Ola and Uber’s philosophy of foregoing usage of personal vehicles.

DriveU, run by Humble Mobile Solutions Pvt. Ltd, was launched in June 2015 by Rahm Shastry, his son Ashok and Amulmeet Singh, a former RedBus and Freecharge executive. Rahm Shastry was one of the early backers of ride hailing service TaxiForSure, which was bought by rival Ola for $200 million in March last year.

The company, which is operational in Bengaluru, Chennai, Mumbai and Delhi, claims to have facilitated close to 20,000 trips since inception, growing at 50% every month. It has roped in about 250 drivers, about two-third of them on a full-time basis and the rest being part-timers. DriveU gets 60% of its bookings from repeat customers, said chief executive Rahm Shastry.

The company aims to have a network of 100,000 drivers in 20-30 cities in two-three years.

“We are making use of drivers (who are) safe, trusted. We have very strict method of verifying drivers’ background, make sure they behave properly, come in uniforms. We should be able to get you drivers in 30 minutes or even 15 minutes going forward,” Shastry said.

DriveU charges consumers a flat fee of ₹ 99 per hour. The drivers get 80% of the fee while the company retains the rest as commission. The average booking period is about four hours, said Shastry.

While Ola and Uber are splurging money on customer acquisition and driver retention, the potential market for DriveU is still very large. India is a large market for passenger vehicles.

However, DriveU may face challenges in getting more drivers, especially in the wake of Ola and Uber splurging on incentives to retain drivers. Though the incentives have come down in the past eight months, both companies have significant financial muscle to spend more on driver incentives if need be. While DriveU plans to stick to the flat rate of ₹ 99, the company offers drivers a bigger share of the fee whenever demand peaks.

The additional incentives are paid from DriveU’s share of the fee. The company may also end up restricting its target audience to a select section of car owners, especially in tier I cities, who prefer to be driven around than driving themselves.

“Our initial target is tier I cities for sure. I am not so sure about tier II cities at the moment, but we will keep our eyes open,” Shastry said. “Of all the private car owners in India, the top 30-40% are our customers. The remaining will probably not use us, maybe down the road they will or they will use us for occasions.”