With $790,000 in new funding, Drive is taking on the fragmented vehicle rental market in Asia
A Q&A with Drive.SG co-founder Adrian Lee. The Singapore-based startup, which has created a car rental marketplace for Asia, announced last week the completion of a $790,000 Series A funding round from Insas Berhad. It was founded in 2011 by Lee and Paul Tan, and prior to this round raised $157,000 in Seed funding last year.
SUB: Please describe Drive.SG and your primary innovation.
Lee: Drive is an aggregator for car rental services in Asia. We provide the local citizens and travelers the obvious international choices, such as Hertz and Avis, but also lesser-known large, medium, and small-size local brands.
Working with local brands or businesses is a very important business strategy for us. The car rental market is very fragmented here in Asia. It is made up of many small mom-and-pop shops that do business with only a small fleet of rental cars; and all these businesses would like to sell online but lack the resources to start. This is where we come in—we provide them with a simple ICT platform to do ecommerce.
SUB: Who are your target markets and users?
Lee: The thing with marketplaces is that you have to cater to both the demand and supply side of the industry. At one end, we serve car rental businesses of different sizes. At the other end, we serve local demand from consumers and businesses as well as international demand from travelers and travel businesses.
SUB: Who do you consider to be your competition, and what differentiates Drive.SG from the competition?
Lee: Our goal is to provide a good online search solution for anyone in Asia to get land transport—rental cars, chartered coaches, limousines, etc. So, anyone who is in this industry can be our potential partner. In that sense, there is no such thing as ‘competitors’ for us.
SUB: You just announced that you’ve raised $790,000 in Series A funding. Why was this a particularly good time to raise more outside funding?
Lee: We have developed a decent foothold in Singapore—this is where we started—and we are looking to provide the same kind of ecommerce convenience to new prospective customers in the region. Therefore, we think it is a good time to raise funds and make a push for neighboring countries.
SUB: How do you plan to use the funds, and do you have plans to seek additional funding in the near future?
Lee: Unlike most online businesses which try to e-serve customers from different countries with their home operations, we intend to use the funds to set up local offices in all our satellite countries. This way, we are able to better serve our local audience. The physical presence shows our local customers in each country that we are serious in meeting their needs, and we are always reachable locally even if they book a transport anywhere in Asia using Drive.
We avoid raising funds unnecessarily because it dilutes the interests of our shareholders. However, if we are able to roll out smoothly in our target countries—Malaysia and Philippines—and for the sake of speedier regional roll out, we may raise additional funds.
Lee: The founders wanted to rent a car but it was so painfully difficult to get one. Back when we started, Google and Facebook were common online services that everyone used in Singapore. Yet for car rentals, consumers had to look up yellow pages and newspapers. That is when we thought it would be a good idea to aggregate all these car rental businesses and put them online.
SUB: What were the first steps you took in establishing the company?
Lee: Doing business is extremely easy in Singapore. You can get incorporated within two days. Forming the team to start the business was perhaps the most important first step that we took. Next, we had to be serious about the business and start doing everything required to launch Drive: Meeting businesses, creating ads, creating the site, and etc.
SUB: How did you come up with the name? What is the story or meaning behind it?
Lee: I am afraid we don’t have a nice story about the name to share. It was just short, simple, meaningful; so there is no reason why we should call ourselves anything else but ‘Drive.’
SUB: What have the most significant challenges been so far to building the company?
Lee: Getting the word out about the service was the most painful part about building the company and the brand. We had to think really hard and run effective campaigns that deliver high ROI with the limited manpower, money and time that we had.
SUB: How do you generate revenue or plan to generate revenue?
Lee: At the moment, we collect a subscription fee from the businesses that are selling their services on Drive. We also charge a small service fee for each booking made.
SUB: What are your goals for Drive.SG over the next year or so?
Lee: We are now expanding our service to neighboring countries. We are dead serious about providing leisure and business travelers a good search solution for their land transport needs. Realizing that goal means going outside the original car rental vertical and working with other transport startups and more transport businesses.