Car-sharing apps have swerved into the European automotive market over the last few years - drumming up serious investment and giving traditional rental services cause for concern. James Walker speaks to Virtuo co-founder Karim Kaddoura about the state of the market
Virtuo co-founder Karim Kaddoura (left) with UK and Ireland general manager Michael Altom outside the Renaissance hotel
The car-sharing market is the latest manoeuvre by tech start-ups like Virtuo to disrupt a traditional, clunky sector: car rental services.
French company Virtuo is one of several players in the emerging market, operating alongside brands like DriveNow, Zipcar and Drivy.
Having received €7.5m (£6.7m) in a funding round led by Balderton Capital – a venture capital firm that has also invested in Bebo, Citymapper and Wonga (putting £10m into the beleaguered firm in August) – Virtuo is positioning itself the be one of the largest players in the European car-sharing market.
In its seed funding round, the start-up managed to raise $2m (£1.5m) from five investors – including the angel investor and TransferWise backer Kima Ventures.
Virtuo is a 24/7 car rental service that allows users hire a car, find its location and unlock it all through an app – without having to pick up keys from an office.
What makes it different to rivals like Zipcar, though, is that it focuses on longer-distance trips outside big cities and enables people to rent high-end cars like a premium Mercedes A-Class for a claimed £35 per day.
Launched in 2015, it operates in a number of cities in France, as well as in Brussels and London.
Compelo caught up with Virtuo co-founder Karim Kaddoura to chat about the company’s beginnings, its plans for the future and its relationship with the traditional car rental market.
Tell us how Virtuo came to be and how it works?
My partner Thibault Chassagne and I are entrepreneurs.
Virtuo is our second start-up – we founded a company in 2008 called Neowebcar, which is a platform that helps car dealers sell new car inventory to buyers, and that did very well.
We became a leader in the new car segment within five years in France, and we wanted to do something else.
We sold the company to a media group in 2014 and created our second start-up, Virtuo.
It’s a mobility start-up that redefines the way you rent a car for long duration trips.
Generally speaking, in all the big cities of the world, there’s less interest for owning a car but at the same time the car as a means of transportation still rules the game for long-distance trips.
We felt a lot of actors have been addressing urban mobility, short trips and the urban mobility revolution.
We work on the extension of that, which is if anyone in a city doesn’t have a car but does want a car for long trips, what are the alternatives?
Today, they are traditional car rentals, maybe peer-to-peer platforms and that’s pretty much it.
We feel those two answers are not the right ones or completely satisfactory in terms of customer experience.
I place myself as a customer and try and see what I would want, and what I would want is pretty much what we have created – which is an instant car rental solution that enables you to get a car on-the-go for longer trips, by the day. You can even rent a car for up to 28 days.
We are taking that space on the market that no-one has really addressed to reinvent customer journeys.
What cities is Virtuo operating in at the moment and where do you plan to expand?
We are a Paris-based start-up. Our first city was Paris and now we have a presence in eight French cities – Paris being a strong city for us alongside Lyon, Aix-en-Provence, Nice, Avignon, Bordeaux, Lille and Toulouse.
We’re also targeting train stations and airports to pick up travellers that are not satisfied by the current mobility solutions at airports and train stations.
And we’ve expanded to Brussels and London – we’ve been there for three months now and we’re happy about the momentum.
Virtuo in London has been very strong. We managed to get featured by Apple as “app of the day” on 14 July, which has drawn a lot of interest to Virtuo.
How many users did you get out of that feature?
It’s impressive. It multiplies by X your number of downloads every day and the number of sign-ups. It’s pretty astonishing but it’s a great relationship with have with Apple.
It is helping us in France to get that visibility because they think that it’s amazing that on a platform like their app stores people can get a car on-the-go and that technology is redefining the mobility game.
We’re really excited about the start in London, having already had an amazing response and ratings, whether it be on the app stores or Trustpilot.
What has the take-up of Virtuo been like thus far?
It has been very strong and the proof of that is having the trust of investors, namely a UK-based fund called Balderton Capital that invested in Virtuo last year – a famous investment firm that has also backed Citymapper, Revolut and so on.
It’s a testament that growth has been exponential and we have a very big ambition in Europe as a whole – and to be a global player in the years to come.
Have you got any plans to introduce all-electric fleets?
We’d frankly love to put electric cars in our fleet but the only issue that we’re currently facing is that we obviously have a product for our end customers and our end customers rent for three days on average, traveling 400-600km on the average trip.
You want to be able to address that need and for long distance trips, electric cars are not the answer.
But we are looking at it – we’re agnostic, not tied to one car or one engine, so it’s interesting to see what innovation will deliver on the electric side.
It will also be interesting to see what autonomous cars bring forward, so we’re looking at that.
Is Virtuo doing a lot of research into autonomous cars?
Yes because the very cool thing is that a major part of fleet is made in partnership with Mercedes-Benz – we have the A-Class and the GLA model.
The new generation of A-Class that is coming out soon is a car that will be semi-autonomous, meaning you will be able to drive our cars without your hands, basically.
It is a beautiful promise and it will make us the first mobility company that equips 100% of its fleet with autonomous cars.
We’re very happy about that but it’s not about the marketing, it’s really about how we are managing to use the latest technology and the latest in autonomy.
What is your view on the future of the car-sharing market? Can Virtuo see itself replacing traditional car hire services?
A lot of people will say one fleet fits all mobility needs. We think this is not true.
It’s an issue of resource allocation. In our view, you can’t have a fleet that does everything. When you address longer trips, that’s when the car makes more sense.
We don’t feel there’s going to be a conversion of car rental from one side and car-sharing from the other side with all those fleets doing everything and addressing all needs.
It’s two different markets and one shouldn’t be stepping on the other one’s toes.
Have you been in talks with any new potential investors?
The great thing about our business is that there’s a huge focus on mobility and we’re part of those mobility players.
We constantly have discussions with car manufacturers and investors. All of them are quite keen on the future of mobility and on our territory, which is addressing extra urban transportation.
Has Virtuo faced any unique difficulties operating in London?
Honestly, I think we are too young in the market to tell you. But so far, what we have been witnessing is an amazing demographic – you know, early adopters, tech-savvy people.
We’re quite careful on security. There’s account validation and the DVLA check is a requirement. We take no risk whatsoever.
At the end of the day, we put really nice cars into people’s hands we need to be careful about this and so far there has been no issues to be noted.
Operating in London, there is that issue car sharing companies need to face, which is having their cars and having to deal with councils.
We don’t have that. The way we work is through partnerships with local car parks. In our view, it’s the recipe to doing our job.