Retail automotive leasing company OTO Capital has raised Rs 10 crore from early stage venture capital firm Prime Venture Partners.
The startup will use the funds to expand to more cities and further strengthen its technology infrastructure, Sumit Chhazed, co-founder of OTO told TechCircle.
Founded by IIT-Mumbai alumnus Chhazed and Harsh Saruparia, OTO partners with banks and non-banking financial companies (NBFCs) to provide the capital and offers customers a leasing option for automotive purchases.
It has tied up four banks and NBFCs and over 150 dealers across brands. The showroom executives, equipped with a digital device and trained on its plans, would explain OTO’s financial options to their incoming users. Users can select their make-model-variant and will be offered three types of plans (3, 4 and 5-year plans). Once the plan is selected, users will be required to share their details and documents, and its technology platform will generate a credit score. Based on their EMI eligibility and cars in that price bracket, users can select the car, sign documents and collect the vehicle instantly. The company claims the whole process can be done in 30 minutes.
“Users need to pay only 5-7% as upfront deposit, pay just 60% of car value in the first four years of the tenure which lowers their EMI to about 25%-30% less than existing car loans,” Chhazed said
At the end of the lease tenure, users can either return the car, extend the lease or make a balloon payment to buy the same car. There is a 2% penalty on the lease amount for returns within the first two years.
It offers two plans – the basic one covers car and insurance while a comprehensive plan comes with additional benefits of service and maintenance.
About 70% of its orders come from its partner showrooms and the rest through its web portal.
For its partner banks and NBFCs, OTO provides a full auto-lifecycle management from lead generation to credit underwriting, insurance, maintenance, payment collection and resale.
Run by 1T9 Technology Private Limited, the startup began operations in October last year and claims to have leased cars worth Rs 10 crores so far. It currently does about 40-50 transactions a month, and is looking to lease cars wroth Rs 100 crore in the next 12 months, Chhazed said.
“OTO is ushering in a new, long-term growth-lever for the automotive sector. Several car buyers need flexibility and medium-term options rather than just short-term rentals or permanent choices. We are excited about the huge demand for this service and are delighted to partner with the company to build a solid franchise,” Sanjay Swamy, managing partner, Prime Venture Partners, said.
Founded in 2011, Bengaluru-based Prime Venture Partners primarily invest in fintech and SaaS startups. It hit the final close of its third fund at Rs 400 crore last year.
Its portfolio includes mobile marketing startup ZipDial, which was acquired by Twitter; artificial intelligence (AI) powered digital transactions reconciliation startup Recko; cloud-based customer experience platform SurveySparrow; mobile payments firm Ezetap; expense management platform Happay; online loan platform Moneytap, logistics-tech startup WheelsEye; research platform Tracxn, invoice discounting platform KredX, and online recruitment platform for engineers HackerEarth.