Bengaluru-based DriveU, an online platform that connects drivers with private car owners, has raised mezzanine funds worth Rs 7 crore (around $1 million) in a round led by California-based Stevens Creek Ventures. Mezzanine finance involves high interest rates and an option to convert debt into equity in case of a default, generally after venture capital companies and other senior lenders are paid.
Stevens Creek Ventures is an India-focused firm that invests in technology-based companies working for the bottom-of-the-pyramid segment.
DriveU will use the money for further geographical expansion, chief executive and co-founder Ramprasad Rahm Shastry said in a statement. The three-year startup currently operates in six regions -- Bengaluru, Mumbai, Chennai, Delhi-NCR (National Capital Region), Pune and Hyderabad -- and claims to have served over 600,000 trips since its start.
DriveU, owned by Humble Mobile Solutions Pvt. Ltd, is an on-demand driver service for local and outstation travel. Using DriveU’s mobile app, customers can hire drivers for round-trips as well as one-way and outstation trips.
DriveU claims that its driver-partners earn a steady monthly income of anywhere between Rs 20,000 and Rs 30,000, while some earn in excess of Rs 40,000. The company, which has both business-to-consumer and business-to-business operations, claims to have over 6,000 background-verified drivers on its platform.
The current investment comes eight months after a $3 million (Rs 19.4 crore) pre-Series A round led by former Google and Uber executive Amit Singhal. Existing investor Unitus Seed Fund also participated in that round.
Basu Ullagaddi, founder and general partner at Stevens Creek Ventures, had made a personal investment in DriveU at the seed stage.
DriveU was founded in July 2015 by Ramprasad Rahm Shastry, son Ashok Shastry and Amulmeet Singh.
Rahm Shastry was the first angel investor in TaxiForSure (now shut by acquirer and ride-hailing firm Ola) and also founded and exited a few technology firms. Ashok Shastry is a graduate from California State University. Before co-founding DriveU, he worked at TaxiForSure in marketing and operations.
Singh, who is the chief product officer at DriveU, earlier worked with FreeCharge, RedBus and ZipDial.