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Contxto – Monashees recently led a US$10.5 million seed round in Brazilian on-demand car rental startup, Kovi. MAYA Capital and ONEVC also participated to support the young firm in expanding its fleet from 600 to 5,000.
Urban mobility is still uncharted territory for drivers without their own personal transport. Kovi solves this predicament by offering car rentals on its application. In the process, it manages entire fleets of vehicles while developing its very own niche.
Two former executives from 99 founded Kovi in August 2018, CEO Adhemar Milani Neto and CTO Joao Costa. Together, they launched a “light asset” model unique from traditional car rental companies.
Compared to competitors, Kovi cooperates with automakers and small rental companies to lease transportation out to last-mile delivery drivers. Automakers rent cars to Kovi at economic prices and then the firm resells them to users.
So far, the startup contracts cars from FleetSolution, Volkswagen’s fleet management extension. Leasing companies and small automakers benefit from this type of transaction as a means to grow and monetize. Drivers don’t accrue risks, either.
“We are in the beginning stages of an urban mobility revolution, like what happened with e-commerce 10 years ago, said Adhemar. “Carmakers are already realizing that cars will become more than a service but also an asset. They are beginning to adapt to that reality.”
Meanwhile, fellow mobility contenders like Localiza, Unidas and Movia purchase cars in scale with guaranteed rebates from automakers for valuable rebates. Typically, they monetize assets for 12 to 18 months via rentals, only to resell them for profit.
Two new players in the mobility value chain will emerge from the company’s sharing economy business model. These include the manager and fleet financier.
According to one of the co-founders, Kovi aspires to specialize in management while automakers and leasing companies focus on finances.
“They have the lowest cost of funding, cheap access to credit, and they will foster their own market,” said Adhemar.
The entrepreneur is also committed to improving driver experience and asset management with Kovi. To accomplish this, he implements competitive pricing and customized services for strong management over the fleets.
Only 20 percent of Brazil’s population reportedly owns a car, meaning there is ample room for disruption in the mobility industry. Traditional rental companies also serve between 20 and 30 percent of Brazil’s 1 million drivers on applications such as Uber, Cabify and 99.
With such gaps, Adehmar contends that the number of drivers will double in the next five years. Even more, the share of rented cars could reach more than 60 percent in major urban areas thanks to Kovi’s unique proprietary system. Specifically, it rewards drivers for good behavior while also providing accident protection.
This is said to be one of the most valuable seed rounds for a Brazilian startup.