Virtuo Raises $96M to Reinvent Car Rentals

The Evolving Landscape of Car Ownership in Europe

In numerous European cities and towns, the costs and practicalities associated with car ownership are increasing. Factors such as congestion charges designed to lower emissions, coupled with high parking fees and traffic congestion, are leading many individuals to favor alternative transportation methods.

Virtuo Secures Funding to Expand its Digital Car Rental Service

A Paris-based startup, Virtuo, is redefining the car rental experience with its fully digital platform. The company recently announced $96 million in funding to facilitate its expansion and technological advancements.

This investment will be allocated to enhancing its technology, extending its services to additional markets – beyond its current presence in France (12 cities including Paris), the U.K. (London, Manchester, and Edinburgh), and Spain (Barcelona, Madrid, and Valencia) – introducing a dedicated service tier for business clients, and increasing the size of its vehicle fleet.

Co-founder Karim Kaddoura reported that Virtuo currently serves 150,000 active users and experienced a 100% growth rate in the past year.

The Impact of Recent Trends on Car Rental Demand

“The popularity of ‘staycations’ has positively impacted our business,” Kaddoura explained. “Furthermore, we’ve observed an increase in the average length of time customers rent vehicles.”

Virtuo’s streamlined, all-digital approach distinguishes it from traditional rental services. Currently, customers can choose between a Mercedes Benz A-Class or a Mercedes GLA SUV. The entire process, from booking to operation, is managed through a mobile app, eliminating paperwork and the need for queues at airports or hotel garages.

Customers also benefit from vehicle delivery and pick-up options, and utilize a virtual key for access.

Funding Details and Investor Participation

The funding round comprises a $60 million Series C investment and $36 million in asset financing. AXA Venture Partners, the investment division of the insurance company AXA, spearheaded the equity round.

New investors include Bpifrance, Alpha Intelligence Capital, and H14, while existing investors Balderton Capital, Iris Capital, and Raise Ventures also participated. Natixis, along with Banque Populaire and Caisse d’Epargne Group, provided the asset financing.

Virtuo’s Position in the Competitive Car Rental Market

Companies such as Zipcar, Getaround, and Turo offer convenient short-term car rental options in urban areas. However, Virtuo caters to a different segment of the market, focusing on rentals lasting from one to 90 days – ideal for longer journeys.

Co-founder Thibault Chassagne notes that traditional car rental companies serving this market often maintain outdated and inflexible processes.

Despite initiating the process online, customers frequently encounter the need for in-person paperwork and must visit rental locations, often situated in airports or hotels, to collect their vehicles. The check-out and check-in procedures can be time-consuming and costly, with potential for upselling tactics.

The Growing Appeal of Alternatives to Car Ownership

“Consumers in the car rental industry are largely underserved,” Kaddoura asserted.

A growing number of individuals residing in cities and large towns are questioning the necessity of car ownership. Consider the financial implications: the average European spends approximately €7,500 annually on car-related expenses, including parking, insurance, maintenance, taxes, and depreciation.

“In Paris alone, this amounts to €5 billion, despite cars remaining unused 95% of the time,” Kaddoura pointed out. “Beyond the financial aspect, the impact of cars on urban space and quality of life is significant, consuming 50% of our cities.”

Sustainability and Fleet Electrification

Driven by environmental concerns, Virtuo is committed to expanding its fleet to include more electric vehicles (EVs). The company already incorporates Hyundai’s Kona Electric into its French fleet and aims to have 50% of its vehicles electrified by 2025, reaching 100% by 2030.

Virtuo has also been offsetting its entire carbon footprint since January of this year.

Navigating the Challenges of the COVID-19 Pandemic

The recent funding round follows a challenging period for businesses reliant on travel and shared spaces. The COVID-19 pandemic prompted individuals to stay home and practice social distancing, making car rental – which involves travel and shared vehicles – a more difficult proposition.

While Virtuo experienced revenue growth in 2020, the company adjusted its expansion plans in response to the broader market conditions.

Future Expansion and Competitive Landscape

Previously, Virtuo had announced plans to expand to Spain and Germany, and further into the U.K. and Belgium. Currently, Germany is slated for launch in 2022, with Milan following shortly. The company’s goal is to operate in 10 countries by 2025. (Belgium is no longer part of its operational network.)

The market for streamlined car rental and car-sharing services is attracting significant attention. Competitors include Getaround, Drover, Zipcar, and Turo. Uber has also entered the market with a car rental offering in partnership with CarTrawler.

While Uber’s service aggregates traditional rental companies, Virtuo offers a fully integrated, end-to-end digital experience.

Investor Confidence and Vision for the Future

“We are very proud and excited to be part of the Virtuo adventure alongside the Virtuo team, led by Karim and Thibault,” stated Benoit Fosseprez, general partner at AXA Venture Partners. “Virtuo has quickly become a tech leader disrupting the car rental space, with a clear long-term vision and strong ambitions for growth into new markets.”

“We are delighted to support Virtuo in its development,” added Caroline Lebel of Bpifrance’s Large Venture fund. “The company offers a true alternative to owning private cars for city dwellers who wish to use more sustainable shared mobility solutions. Born in the digital era, Virtuo’s 100% digital experience is backed by powerful technology and artificial intelligence to optimize its operations.”