Zoomcar CEO Greg Moran. Zoomcar may also become the second most funded startup in the mobility space, just behind its rival Ola if the ongoing deal succeeds. (Mint)
Zoomcar CEO Greg Moran. Zoomcar may also become the second most funded startup in the mobility space, just behind its rival Ola if the ongoing deal succeeds. (Mint)

Mahindra said to lead $500 million Zoomcar funding round

  • Mahindra is expected to pump in $300-400 million into Zoomcar, which will use the funding to buy more cars
  • Zoomcar’s valuation may shoot up close to $1 billion, if at least 40% of the deal is financed through the equity route

Bengaluru: Self-drive car rental platform Zoomcar (ZoomCar India Pvt. Ltd) is in talks to raise around $500 million in a fresh funding round led by automaker Mahindra and Mahindra Ltd, said two people aware of the development. The funding round will include a mix of debt and equity financing, the people said, requesting anonymity.

An industry analyst said Zoomcar’s valuation may shoot up close to $1 billion, if at least 40% of the deal is financed through the equity route. Zoomcar was valued at around $170 million when it closed its Series C round in February 2018.

Mahindra is expected to pump in $300-400 million into the company, said the second person mentioned above. Zoomcar’s existing investors from the US are also likely participate in the current round. A large portion of the funding will be used to finance vehicle purchases, added the second person.

The company’s chief executive, Greg Moran, confirmed that the company is looking to raise up to $500 million, but did not disclose the investors.

“Zoomcar is in advanced talks to raise up to $500 million of equity and structured debt from leading global financial investors. The expectation is for fresh investors to lead the round along with participation from existing investors. This transaction will close in the current quarter," the company said in response to Mint’s queries.

Mahindra did not respond to queries till publishing of this story.

Zoomcar was started by American duo Greg Moran and David Back in 2013 in Bengaluru. Back, however, left the firm citing personal reasons in early 2015.

Till date, Zoomcar has raised a little over $100 million from strategic investors. It lets users book vehicles and make payments online. Users need to locate a Zoomcar vehicle lot within their locality to pick up the vehicle. It also offers doorstep delivery of the rented vehicle.

The firm had also launched an associate programme in April 2016, which allowed people to lease their own cars to its platform under a revenue-sharing model.

Zoomcar charges a 25% commission on revenue that its associates make.

Moran told Mint that Zoomcar is targeting to add up to 3 lakh cars on its platform in the next 2-3 years, and plans to achieve around 25 million bookings within the same time period.

It currently has over 7,000 cars on its platform, with an additional 300 electric vehicles. Zoomcar had earlier launched its bicycle sharing operations named PEDL in late 2017 but suspended the operations a year later in December 2018.

Zoomcar reportedly sold a large part of its cycle assets to rival two-wheeler rental startup Bounce.

The firm raised $40 million in a Series C round led by Mahindra in February last year, $24 million in a Series B round in August 2016 led by Ford Smart Mobility, and another $21 million in two tranches between October 2014 and July 2015, from Sequoia Capital, Empire Angels and T.V. Mohandas Pai, among others.

Zoomcar may also become the second most funded startup in the mobility space, just behind its rival Ola if the ongoing deal succeeds. Ola also recently forayed into the car rental business on a pilot basis, and has pledged to invest $500 million into the new category.

Close