Home / Companies / Start-ups /  Drivezy to raise funds but at lower valuation

BENGALURU: Vehicle rental platform Drivezy is in talks to raise $30-35 million in equity funding from a UAE-based sovereign wealth fund, a clutch of private investors in the Gulf region, Japan’s Yamaha Motor Company, and energy and petrochemical giant Shell Global, according to two people aware of the development.

The new round will, however, see Drivezy’s post-money valuation drop by nearly a quarter to $100 million, from the $135 million valuation it was seeking in its earlier funding talks in March, said one of the two people mentioned above, who did not wish to be named.

“Drivezy is also evaluating shifting its headquarters to UAE capital Abu Dhabi once the deal goes through, which has now reached the final stage…some of the existing investors may also participate in the round," said the second person mentioned above, also requesting anonymity.

Neither person named the UAE-based sovereign wealth fund and the private investors. Talks with Shell Global and Yamaha are expected to close by next month. However, talks with Gulf investors and the UAE fund are still going on, they added.

The UAE-based sovereign fund and private investors are expected to pump in around $15 million into Drivezy, while Yamaha is expected to invest $10-12 million with Shell Global’s investment arm adding around $5 million, the second person said.

A Drivezy spokesperson declined to comment. Mails sent to Shell and Yamaha remained unanswered.

The news was first reported by on September 19.

Drivezy’s plan to move base comes at a time when the micro-mobility segment in India has seen a halving of demand post the covid-19 outbreak.

Drivezy has so far raised over $40 million in equity financing from investors such as Das Capital, Y Combinator, and White Unicorn Ventures. It had also raised $100 million in an asset financing deal, which is parked in a special purpose entity, Harbourfront Capital, set up in collaboration with AnyPay in November 2018.

In 2019, Drivezy had held separate talks with SoftBank and Amazon to raise funds but they fell through. Mint reported in March that Drivezy was planning to raise $100 million.

Meanwhile, Drivezy’s closest competitor Zoomcar, which was expected to raise up to $500 million for its Series D round, also cut short the funding round to around $100 million, after a potential merger between both startups fell-through.

Zoomcar had in January secured $30 million in a round led by Sony Innovation Fund, with plans to raise another $70 million.

Mint reported on June 2019 that both Zoomcar and Drivezy were exploring an equal merger deal.

The first person cited above said that those talks were exploratory in nature and both companies eventually decided to abandon the plan.

If Drivezy’s new funding round goes through, it will become one of the few startups in the mobility industry to raise equity capital at a time when investor interest in the segment has been dull due to a sharp fall in demand.

Mint reported in July that Drivezy had begun liquidating around 30% of its 15,000 two-wheelers and part of its four-wheeler fleet due to mounting debt and falling demand. Drivezy’s rivals including Bounce and VOGO had also earlier decided to sell-off vehicle assets to raise capital and use it to invest in other businesses.

Prior to the lockdown enforced by the government in March, Drivezy had substantial demand from online delivery platforms such as Swiggy, Zomato and Dunzo. That took a hit since the large-scale reverse migration of people from cities during the pandemic.

“Demand from consumer side has been the main source of revenue for the mobility and vehicle rental sector, but covid has changed that. Drivezy is now repositioning its business strategy to offer a full-stack mobility platform by offering both short-to- long-term vehicle rentals, as well as a new platform to buy or rent brand-new vehicles directly from manufacturers," Ankur Sengupta, head of business operations, Drivezy said in an interview in July.

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