Car rental platform Drivezy raises $5 mn by offering its own cryptocurrency
Mumbai-based AS JustRide Tours and Travels Pvt. Ltd, which operates peer-to-peer car and bike rental platform Drivezy, has raised $5 million in the first round of its initial coin offering (ICO) by offering tokens called RentalCoins.
Mint quoted Drivezy's chief executive officer Ashwarya Singh as saying that existing investors and high networth individuals (HNIs) from Japan and Singapore had participated in the ICO.
An ICO is along the lines of an IPO (Initial Public Offering) and is the means through which new cryptocurrency ventures raise funds. ICOs are unregulated and are often used by companies to bypass the stringent norms of raising money from private equity and venture capital firms as well as banks.
Drivezy used RentalCoins 1.0 as its private cryptocurrency or token. The coins, built on the ethereum blockchain, were developed by the company to create a fleet of collaboratively-owned vehicles accessible to customers.
Drivezy runs a platform that allows car owners to lease their vehicles to the company, which in turn rents them out to customers.
The Mint report stated that the company has more than 1,300 cars listed by more than 800 owners. Drivezy says it has more than 500,000 registered users.
As part of the ICO, Drivezy offered 12.5 million RentalCoins on sale at a value of 0.00141 ETH.
The ETH or Ethereum value will determine the amount of the revenue each user is entitled to post the number of rentals on the platform.
At the close of the first round, which kept the minimum purchasable units at 12,500, nearly 3 million tokens were sold.
Singh told Mint that the company planned to exchange the tokens for dollars through cryptocurrency exchanges in the US.
The fluctuating value of ethereum poses a threat to the ICO as well as the investor. As per terms of the ICO, all investors are entitled to get 95% share of monthly revenue garnered from renting vehicles on the platform.
According to the report, the startup had earlier allowed users to pay for vehicle rentals using bitcoin but later discontinued it.
“Unfortunately, we had to discontinue the pilot due to the escalating transaction costs which are often as high as $60 per transaction," Singh was quoted as saying. "We shall, however, stretch the scope of RentalCoins in the second phase to cover crypto transactions on our platform.”
Drivezy plans to launch the second round of its ICO soon and hopes to raise $15 million through the offering.
The Drivezy ICO took place within days of of Union Finance minister Arun Jaitley stating in his Union Budget speech that his government would move towards outlawing all cryptocurrencies.
Incorporated in April 2015 by founders Abhishek Mahajan, Amit Sahu, Ashwarya Singh and Vasant Verma, the company had previously raised $15 million in all, according per VCCEdge, the data platform of TechCircle.
Last October, Drivezy had mobilised $10 million (Rs 65 crore) in a fresh round of funding and said it would use a large chunk of the money to create rental coins, Das Capital, Axan Ventures, CrowdWorks and IT-Farm had participated in the round.
The company had raised $3 million in November 2016 in a bridge round of funding from Y Combinator partners and a number of global investors.
Bengaluru-based Zoomcar is the most well-funded player in the self-driving vehicle rental space, with Revv and Voler Cars among the other prominent players.