Generation Start-up: Invygo offers drivers a car without the commitment
The first app-based car subscription company in the Mena region is an alternative to buying or leasing
Car ownership comes with a long-term commitment, maintenance costs, registration and insurance fees — and often a hefty loan to pay off. With car rental, customers have to pay an upfront deposit and additional fees, and are given whatever “equivalent” model is available.
The impetus for Dubai-based start-up Invygo — a combination of the words “invigorate” and “go” — began with one question, says chief executive and co-founder Eslam Hussein: “How do we make it easier for consumers to actually get a car and keep the sense of ownership without the commitment and the financial burden?”
Car ownership is already declining in much of the world. Invyo is tapping into this trend by providing consumers with a better way to pick and choose which car they want and when they want it.
Joel Ayala, managing partner at Invygo investor Class 5 Global
Invygo offers an alternative that has already gained traction in other markets, such as the US and UK: a subscription service that allows consumers to rent a specific car for a minimum of one month with delivery, maintenance, insurance and roadside assistance included. Invygo subscribers also have the flexibility to pause, downgrade or upgrade as needed.
“Consumers value flexibility above all else. Car ownership is already declining in much of the world. Invygo is tapping into this trend by providing consumers with a better way to pick and choose which car they want and when they want it,” says Joel Ayala, managing partner at Class 5 Global, a lead investor in Invygo’s $1 million (Dh3.67m) seed funding round, which closed in November.
Car subscription services in the US include start-ups such as FreshCar and Joule; corporate ventures like flexdrive; and manufacturer programmes such as Book by Cadillac, Porsche Passport, Care by Volvo and Canvas (backed by Ford). UK options include Cocoon, Drover, Flexed and Wagonex.
It is a system that depends on a move away from car ownership among consumers — “especially millennials, generation Y and Z”, says Mr Hussein, 32.
With the proliferation of ride hailing companies such as Uber and Lyft, people have greater mobility choice, particularly in urban areas. “In many markets, we see a clear shift in the way consumers view mobility, not least in their views towards vehicle ownership,” says a February 2019 KPMG study titled Mobility 2030.
Half of car owners know today that they will no longer want to own a personal vehicle by 2025, according to KPMG’s Global Automotive Executive Survey 2019. UK Department for Transport figures show the percentage of men in England aged 17 to 20 holding a full UK driver’s license falling from 51 per cent in the mid-1990s to just 29 per cent in 2017.
While mobility in the UAE has gradually transformed with Careem and Uber, and public transport options such as the Dubai Metro, it largely remains a car-centric country through traditional ownership.
“Our competition is actually the mindset of ownership and how do we shift that mindset,” says Mr Hussein.
Mr Hussein came up with the idea for Invygo in 2017 while at IE Business School in Madrid and brought on co-founder Pulkit Ganjoo, an IE alumnus, in early 2018. For funding of the project, they initially “bootstrapped” before securing $275,000 in a pre-seed round from angel investors in November 2018.
They then applied to the Misk500 accelerator programme — a collaboration between Saudi Arabia’s non-profit Misk Foundation and the US-based 500 Startups — from which they graduated in May 2019.
“[When] we applied, we had zero revenue and zero car dealers. We were just three people: me, Pulkit and our lead software engineer,” says Mr Hussein. “We finished the programme with one of the highest revenues among our peers.”
In November 2019, Invygo closed its $1m seed round led by San Francisco-based venture fund Class 5 Global and joined by Equitrust, the venture arm of the Choueiri Group; the UAE's Gulf Islamic Investments; the US-based Kairos K50 programme; and investor William Zeqiri, the founder and chief executive of Fresha.com.
Invygo, which has an office at the in5 Tech building in Dubai Knowledge Village and now has nine full-time employees, plans to use the funds to expand to Saudi Arabia, Bahrain and other GCC countries.
In the UAE, Invygo currently has tie-ups with three car dealerships, including Al Rostamani Group’s Arabian Automobiles and Galadari Automobiles, offering approximately seven brands and 35 car models.
The app has had more than 1,000 subscribers since launch and there are 350 active subscribers with cars on the road, Mr Hussein says.
The way it works is simple. Customers choose a car, upload their license and sign their documents all from within the app. The time frame choices available are one month, three months, six months or nine months.
“It takes approximately 90 minutes for you to register, subscribe and have the car delivered to your doorstep,” Mr Hussein says.
Prices start at Dh1,350 depending on the type of car, add-ons (such as additional mileage and Salik) and the length of subscription. The car brands on offer are mainly mid-range, such as Nissan, Mazda and Toyota. Most have low mileage and none are older than 2017 models. For example, a 2019 Toyota Yaris would cost Dh1,420 a month, while a 2019 Infiniti Q50 would cost around Dh3,850.
Dealerships get a percentage of the price, but Invygo declined to share the exact amount. Mr Ganjoo, 28, says they often negotiate with the dealer to bring the cost down for consumers. Prices are comparable to those of rental car companies, but Mr Ganjoo says the main differentiator is Invygo’s all-inclusive price with no deposit or additional fees.
“People sometimes compare a monthly price to a rental or a lease or buying — which is not an apples-to-apples or a fair comparison because all of them have either upfront payment or massive deposits or security blocks on your cards,” Mr Ganjoo says.
Coupled with the fact that cars are a depreciating asset, consumers also forget the costs of car maintenance, such as new batteries and tires, Mr Ganjoo says. The flexibility to pause a subscription is another advantage, especially in the UAE, where people travel often and sometimes leave for the summer.
“No human being drives their car for 365 days a year. At the most, you’re going to drive it for 11 months … why pay for the days you’re not going to use the car?” Mr Ganjoo says.
Invygo is not the only player in the market, however. App-based car-sharing services Ekar and UDrive allow users to drive and pay by the minute (minimum 60 fils per minute).
Selfdrive.ae, which started in August 2017, also offers monthly car rentals from one month to 36 months. With Selfdrive’s “microlease subscription platform”, car lease is available within three hours and cars can be collected from the dealership. In contrast to Invygo, it requires security deposits on select car models.
Soham Shah, founder and director of Selfdrive, says the start-up raised $150,000 in a seed round through crowd funding and $6.5m in a “strategic partnership deal” with a consortium of original equipment manufacturers (OEMs).
Carasti, which launched just last month, is almost identical with Invygo. Customers can book a car on its app for a minimum of one month although its “Commit & Save” option offers discounted rates for those who subscribe for the same car for six-to-12 months.
There is one catch with the services offered by Invygo, Selfdrive and Carasti; they have limits on the number of kilometres that can be driven. Invygo’s standard limit is 2,500 kilometres per month, which can be upgraded to 4,500. Selfdrive’s limit is 4,000. Carasti’s limit is more generous, ranging from 4,500 to 7,000.
Mr Hussein says he and most of his team have cars through the Invygo app, and is convinced that there will be growing demand for simplified and headache-free car ownership.
“There’s a big appetite from consumers,” he says. “We have one of the youngest populations in our region and every day there are people who want to buy cars, but no one wants to commit to a three to five years financial loan.”
Updated: January 12, 2020 04:28 PM