Bengaluru-based self-drive vehicle renting startup Zoomcar is in advanced discussion with its four-year-old competitor Revv for a possible buyout, two people in the know told local news outlet Entrackr.
“The conversations are fairly advanced, but they are stuck at the share swap ratio. Revv wants one share for every three shares, and Zoomcar wants to give one share for every 4.25 shares,” one of the two people cited above said.
Last year Zoomcar was in talks with Drivezy, its other competitor that operates both cars and a two-wheeler rental platform, for a merger that didn’t materialize. “A few months ago, SoftBank was interested in investing in Zoomcar, but the condition was that it had to either merge with Drivezy or Revv,” one of the two people familiar with the matter told Entrackr. The person said Drivezy wasn’t keen on the merger deal.
It’s been long since any self-driving renting startups—Zoomcar, Drivezy, Revv, among others—have managed to raise huge funding as investors are looking at some consolidation in this space. “Everyone is struggling with raising their next funding round as things have changed after the WeWork fiasco,” Ashwarya Singh, founder, Drivezy told KrASIA.
Gurugram-based Revv—that has fallen behind Zoomcar and Drivezy—last raised money in 2018 when Hyundai led a Series B round of USD 14.3 million with participation from Edelweiss and Beenext.
“Some consolidation in this space is bound to happen through mergers and acquisitions. Car rental space has been moving slowly compared to two-wheelers,” Singh said. Since none of the major players have been able to raise the next round of funding, investors are waiting to see some merger or acquisition to take place before deciding to invest.
Singh believes one of the reasons that no one is able to raise money is because there are too many players in this space that are after a three-digit round of funding, so “investors would prefer a two-horse race rather than a three- or four-horse race.”
Last year, Ola intensified this space by launching its own self-drive vehicle renting service called Ola Drive. It said it would host a fleet of 20,000 cars by 2020, 50% more than the fleet size of the entire industry put together. It claimed Ola Drive already has 200 million subscribers—the largest user base for a car-sharing service in the country.
Zoomcar reportedly has 7,000 vehicles on its platform with two million customers spread across 45 cities. Drivezy said it operates 5,000 cars and 20,000 two-wheelers in 11 cities. Singh is not looking for any acquisition or merger with anyone for the next 12 to 18 months. He would rather focus 60% of the company’s resources in two-wheelers and the remaining on four-wheelers.