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Car-on-demand technology: the missing link to a new mobility paradigm for urbanites

The transforming impact of digital technologies on mobility in urban areas has been demonstrated over the last 5 years: on-demand scooters are available via smartphone applications such as Tier, Dott, Lime in all big cities, on-demand driver applications exist on the whole planet thanks to Uber, Freenow, and car-sharing applications such as Getaround have democratized the mutualization of mobility vehicles between users in cities. This trend is reinforced by the declining car ownership rate in such cities, now at 30% only in Paris and at a higher level amongst the less-than-30-year-old urban inhabitants more sensitive to the circular economy and to the protection of the environment and the fight against climate change, which also explains the strong trend of car electrification in Europe (in 2021 Q1, in France, more new electric/hybrid cars were sold than diesel cars for the first time in history). Such revolutionary digital mobility applications have set high standards in terms of User Experience (“UX”) fluidity, convenience, personalization and availability.

Nevertheless, there was an urban mobility segment that was still an oligopoly controlled by 5 global legacy players: the 3-days, 400km (or more) trip to escape the city for a few days. Hertz, Avis, Sixt and other rental car groups have trusted this segment for years unable to bring full digitization. Moreover, their UX has rapidly become outdated compared to services emerging in all digital sectors of the economy that educate millennials and set expectations: queues at the counter, papers to fill, constrained opening hours, uncertainty on the precise car model the user will get, risk to lose keys, lack of personalized marketing, etc.

What is the value proposition of Virtuo?

Virtuo developed a technological platform to address this very segment and solve the frictions of the car rental experience overall. Only technology could suppress queuing at Paris – London – New York – San Francisco – Singapore rental counters, car keys, or 24/7 rentals. Only technology could allow usage of data, precise model selection, data-based fleet allocation, pricing algorithm, parametric insurance models and order dispatching to B2B partners in charge of fleet cleaning, conveying and reparations. Since inception, this proprietary technology was developed based on 3 pillars: B2B2C workflows, differentiating UX, data-science. AVP’s technology advisers Crosslakes ranked Virtuo technology in the top 5% of all the tech companies they met over 20 years, notably emphasizing their data-science stack, a critical piece to design UX personalization via data, pricing and fleet size and geographical allocation optimization.

With this proprietary technology, Virtuo has built a unique business model and demonstrated yet amazing KPIs on several fronts. On the B2B/supply side, Virtuo has convinced best global OEMs to provide their cars, of which Mercedes, BMW, Peugeot and more coming up in 2021. Virtuo has also been able to secure multi-millions fleet financing programs from Natixis to avoid the use of equity capital in the fleet funding. On the B2C side, NPS is above 70, TrustPilot rating is 4,8/5 and repeat intention from users above 90%. All-in, Virtuo multiplied revenues by 3x in 2018 and in 2019 and was also able to keep growing in 2020 and increase margins during Covid while the global car rental market collapsed by more than 50%, leading several historical players to restructuring. Virtuo demonstrated the viability of its business model expansion with
successful openings in the biggest cities of France, Spain, UK, and now Italy. Virtuo also demonstrated its innovation skills with regular launches of new services such as cardelivery to the doorstep or Virtuo-for-business. Based on these achievements, Virtuo was selected as a member of the French Tech 120 in 2021.

Why the interest?

AVP’s entry in Virtuo’s capital is meant to support a 5 years value-creating journey around an ambitious revenue acceleration plan, based on the following convictions:

  1. Covid has accelerated digitization of all services including mobility, has deeply transformed the geographical relationships to our jobs with remote working becoming the new normal. New mobility use cases have arised – staycations, workations – with a strong appetite of millennials to gain back their freedom post Covid, traveling more and leaving the city for week-end or longer vacations.
  2. Demonstrated successes in Paris, London, Madrid, Barcelona, Manchester, etc. can be easily replicated in Milan, Berlin, etc thanks to a technology that scales, with fewer operational requirements. Virtuo’s footprint is to expand to 10 countries by 2025 to reach 1m users across Europe. Paris – London – New York – San Francisco – Singapore
  3. New client-centric services can be launched building on the existing product: car delivery, Virtuo-for-business, fleet electrification, etc.
  4. Virtuo’s defense barriers are high: Proprietary technology stack cumulating B2B and B2C workflows representing years of development, exclusive partnerships with global OEM firms and banks, unique virtual key technology, category leadership in France on a native car rental app, excellent executive team around founders as demonstrated by AVP’s due diligence partners.
  5. Demonstrated operational leverage since 2017, and notably in 2020, will continue via growth, notably due to higher lease agreements negotiation power with OEMS.
  6. ROI-oriented marketing actions and activation funnel proactive management can now be deployed city per city with the hiring of a new seasoned CMO to boost performance.
  7. Optimization of the Insurance costs for Virtuo facilitated thanks to the preferred access to AXA insurance companies in countries where Virtuo operates.
  8. Demonstrated team-spirit collaboration between AVP teams and Virtuo’s founders Karim and Thibault over the last months where AVP could bring immediate added-value to Virtuo.