UAE-based pay-per-minute car rental service Udrive is opening up its business to the public as part of the latest drive to inject fresh capital into the company.
Udrive, which has around 180,000 registered users across Dubai, Abu Dhabi, Sharjah and Ajman, has partnered with crowdfunding outfit Eureeca, giving anyone the opportunity to invest as part of a Series A round of funding for the start-up.
CEO and founder Hasib Khan told Arabian Business potential investors can plough as little as $500 into the company, while there is currently no upper limit in terms of investment figures.
He said: “This is a conversation that happened very early, back in 2017, with Eureeca. We were always in touch with the founders and the management of Eureeca and I was always interested to give back to the people who are actually using us.
“We’ve been contacted now, through the Eureeca platform, by a lot of our own members that are using our technology and our mobility and they were so amazed that we are going for crowdfunding.
“It seems very positive. We expect to secure a part of our round through the crowdfunding.”
It comes after a previous attempt at a Series A funding round was decimated by the onset of the global coronavirus pandemic earlier this year.
At that time, around the beginning of March, Khan revealed that the company, which was founded in the UAE in 2017, was on the verge of finishing the round, which was standing at $4 million.
“But then all of a sudden Covid came and everything fell apart. We’re now back communicating, some have decided to take a little bit more time until they come back,” he said.
The lockdown measures enforced by the UAE government in a bid to curb the spread of coronavirus, saw the company forced to completely stop operations for ten weeks. Khan also had to cut his workforce by around half.
“That was a crazy moment. You have to imagine, we were having a $30m valuation and all of a sudden you have such a crisis coming and hitting you and you go straight into emergency survival mode instead of expansion mode,” he added.
Even when the company restarted in May it has been with a smaller fleet of 200 vehicles, down from the 600 utilised pre-Covid-19. They are currently using 250 cars.
Udrive new users, meanwhile, have grown by more than 20 percent over the last six months and the user growth is expected to double in 2021 – peak usage is recorded on weekdays between 7am to 11am, and between 4pm to 8pm.
He explained: “Since Covid has started and since we moved into this dilemma, we saw the average trip time increase from around 41 minutes to over 60 minutes per trip. That showed us that people would rather keep the car for a longer time and don’t just return the car when they arrived at the mall or at their friends’ place.
“They would rather keep the car for another half-an-hour or 20 minutes and take a trip back with the same car instead of giving it to someone else.”
In Dubai alone, the number of driver licenses has increased to 2.5 million this year, compared to 1.8 million last year.
According to a report by KPMG, half of the car owners today will no longer want to own a vehicle by 2025, indicating an increase in the trend of on-demand transportation services. A further report by ResearchAndMarkets, revealed the car rental market is set to grow at a CAGR of 11.6 percent from now until 2022.
Khan said he hoped the funding round, which is due to close in the next couple of months, can generate as much as $5m, which will help boost the fleet in the UAE up to 550 vehicles and fund expansion plans, which a view to entering Saudi Arabia or Turkey by the end of the year.
“We’re basically securing those funds to get back into the growth mode, to get back into expansion, as we already intended back in March 2020 before coronavirus came. Our intention is to immediately grow back the fleet with the funds that we would get, to what it was and above that.
“The other plans we have outside of the UAE is expanding into Saudi Arabia and into Turkey. We have strong partners who are going to support us with this expansion. We have existing partners that will be able to take us there.
“Our intention is to get into one of those two countries before the end of this year, basically within the next two months. We have finished already licensing and we’re ready for it, the only thing that needs to finalise is the funding round for us financially to be able to do this step.”
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