Photo Credit: PR, Screenshot

India’s ZoomCar has raised $8 million in Series A funding, led by Sequoia Capital, the company announced on October 31.

The high-tech Indian car rental company started in Bangalore in February 2013, with 7 vehicles at 1 location. It now has over 250 cars at about 40 locations across Bangalore and Pune, with plans to expand to other cities in India to Delhi, Mumbai, Chennai, Hyderabad, and others.

“In India, 95% of car rental is chauffeured,” ZoomCar’s president and co-founder David Back told Geektime. Avis is 100% chauffeured.”

“What ZoomCar allows you to do is rent a car and drive it yourself.”

Back explains that cars in India are very expensive, due to import taxes of 200%, while wages are low. This creates a situation where car rental companies prefer to pay a chauffer to look after their expensive asset rather than trust customers to drive it themselves.

But wages for drivers have been going up, in part due to Uber’s entry into India. As prosperity grows in the subcontinent, many people would like to drive themselves, without the enormous expense of actually owning their own car.

ZoomCar caters to this need, saying they are the first company to focus on self-drive and have found themselves turning away customers every week since they launched. As a result, they claim, their marketing costs are negligible.

ZoomCar also takes bookings online and offers iOS and Android mobile apps. The cars are parked in neighborhoods where customers live and work. They even offer a plug-in electric vehicle (REVA E2O).

ZoomCar’s investors include Sequoia, Mohan Pai from Infosys, and Abhay Jain from Manipal. Former Harvard President Larry Summers was one of the company’s angel investors.

The new land of opportunity

The company was founded by two American expats David Back and Greg Moran, two Ivy League grads in their 20’s who moved to India to take advantage of business opportunities in emerging markets.

“The opportunity here is astronomical,” explains Zoomcar Co-Founder and President David Back.  “Around the world, our business model thrives in ultra-dense cities with low car ownership rates.  By 2030, India will have 68 cities with populations exceeding 1 million, while all of Europe only has 35 such cities.”

“Zoomcar has broken many conventions,” stated Shailendra Singh, Managing Director of Sequoia India.  “David and Greg are incredibly driven and determined entrepreneurs who moved to India from the USA to usher in a new era of self-drive. They have built technology to make an incredibly user-friendly experience, with all bookings happening through the web or mobile app. With those characteristics, they are seeing incredible demand and have had to turn away customers 89 weekends in a row.  We think they have a shot at changing the rules on car ownership in India. We are delighted to back them and support them in their endeavor to disrupt the traditional car rental market through a hyper-local car sharing model.”

Lawrence H. Summers, Former U.S. Treasury Secretary and Former President of Harvard University said “I am proud to have been an angel investor behind Zoom.  In a developing, dense country like India, there is even more benefit from automobile sharing.  Zoom has the potential to help consumers, to help the environment and to empower Indian businesses.”