South Africa’s FlexClub adds $5M to seed round to scale its car subscription marketplace – TechCrunch

The traditional process of buying, insuring and financing cars in emerging markets can be daunting, and it defeats the purpose of building an all-car car experience. today, Flexclub, Is a South African company to be provided With $ 5 million to improve the drivers’ experience in these markets.

Flexclub Was established By 2019 Marlon Gallardo, Rudolf Wavroch And Tinashe Ruzane. The company is an online marketplace that seeks customers with flexible access to long-term cars with its partners, offering car subscriptions.

That same year, the company closed a $ 1.2 million seed round led by CRE Venture Capital. According to the company’s CEO, Ruizen, it is a seed expansion round of $ 5 million (in equity and debt), with the total investment raised by FlexClub exceeding $ 6 million.. The company says it will use funding to improve its technology that protects and limits partners’ exposure to risk.

In emerging markets in Africa, Latin America, and Southeast Asia, most ride-hailing drivers do not have access to car financing. Generally, They rent their cars through social media, classified sites, or connect with a car owner willing to rent. It was the model FlexClub launched in South Africa, and after raising $ 1.2 million, it expanded to Mexico.

Partnerships With uber To help both countries and their community of drivers subscribe to cars, FlexClub has claimed traction, but will not split the numbers. These customers, including those using cars for delivery, Is called Commercial Members by FlexClub. In December last year, the company decided to open its product to another group of customers Is called Private member.

“When we first started, we Were focused At one stage of our strategy came from our knowledge of ride-hailing drivers because of our career at Uber, ”Ruzen told TechCrunch. “We wanted to help a community of riding drivers kept out Reaching cars. But right now, we have built a product to work for someone else In college Ride driver

In flexclub market, Cars Is subscribed Between a hybrid of short and long term leases. This means that customers pay all monthly inclusive fees, and at any time, they can unsubscribe, change or buy cars.

But to buy a car from FlexClub, drivers is encouraged to drive Safely And comply with FlexClub recommendations when using a car. By doing this they get points accumulated over time, it is cheaper to buy cars if they choose.

It uses banking, credit bureaus and identification data as well as rewarding FlexClub for assessing the risk profile of its members and whenever it is,.

Image Credit: Flexclub

Ruzane says the past year was challenging for the company because of what it meant for mobility. At the peak of the first wave of the epidemic, members of the ride faced financial difficulties. Nevertheless, the company partnered with distribution platforms to allow ride-hailing drivers to use their cars to transport goods and packages..

During that period, FlexClub was able to partner with big brands such as American market rental company Avis, which offers car subscriptions on its market.. In addition to Avis, Ruzen says the company’s partners range from small fleet owners to multinational fleet operators..

Pandemic made it possible for FlexClub to think outside the box and list these partners on its platform. However, this was not easy as FlexClub has had to earn trust by building credibility.

“One of the challenges we’ve faced was that we had to build a reputation Trust In the industry. It took us two years to get a brand like Avis to see the value in putting our subscription offers on FlexClub. But with that set up, it is now very easy for us to continue investing in running this new distribution model.

Image Credit: Flexclub

He compares the distribution model of the automotive industry to how the music industry was decades ago. Again, the CD dominated music revenue but has now given way to streaming..

“If you look at what the music industry looked like 10 years ago, more than 50% of music revenue was CD. Now there is over 80% streaming. Industry Successfully The transition from product-led delivery to service-based delivery. I think This is what we can expect in the automotive industry over the next decade. “We can be an ally for the automotive industry in driving that growth because we have market-tested our product with a segment of the population that people thought customers did not have a good profile to serve.

FlexClub’s Expansion in Mexico Instead of Other African Countries Continues a Series of Global Expansion for South African Companies.

According to the CEO, two factors dictated the move to FlexClub. First, the founders belong to both countries – Marlon Gallardo is Mexican while Rudolf Waveruch and Tinashe Ruzen are South African. Subsequently, the two markets have a lot of similarities. According to How does the automotive industry work.

South Africa and Mexico have large manufacturing bases and advanced secondary markets where brands can lease used cars.

Kenya and Nigeria, On the other hand, Is a separate automotive value chain. Although both countries have a growing manufacturing industry, it is still as nascent as most vehicles Are imported From countries like america and the like Japan.

Tanishe said there is an opportunity to take FlexClub not only to these areas but also to most emerging markets around the world. However, There is no hurry to do so.

FlexClub has been able to attract investors who Are tying up With its mission to democratize car financing and become a global mobility company.

Variety Ventures, Its major investor, has supported mobility-first companies such as Postmates, Uber and Virgin Hyperloop. Other VC investors include CRE Venture Capital And Effort. Angel investors like WordPress founder Matt Mullenweg; Federico Ranero, COO of Kawak; Tariq Zaid, East Shopify and Getaround Key; And Ron Pragides, East Also participated in the rounds of Twitter and Salesforce.