In late March, when the country closed for business following prime minister Narendra Modi’s clarion call for a complete lockdown in the light of the Coronavirus pandemic, a number of B2C startups turned off the lights. Some withered away, succumbing to zero revenues and sinking valuations. Others rose to the occasion and improvised on existing lines of businesses or pivoted into new businesses.
On-demand chauffeur service app DriveU was among the ones that decided to improvise. It revved up its B2B service line, which prior to the pandemic accounted for 25-30% of its revenues.
Up until the pandemic disrupted operations, Humble Mobile Solutions, the Bengaluru based startup that owns and operates DriveU, was well on track to break even and book its first profits in June this year. It claims to have booked a record number of users and hit every target and size until the second week of March, after which it decided to lay off about 40% of its 105-odd workforce, DriveU co-founder Ashok Shastry told TechCircle.
Shastry, who did a stint with shared mobility startup Taxiforsure prior to starting up, founded DriveU in 2015 following his discovery of San Francisco headquartered on-demand parking and valet services provider Luxe Valet. His father, serial entrepreneur Rahm Shastry is a co-founder. Former Freecharge product executive Amulmeet Chadha also joined the team as co-founder but quit in 2017.
“We're still affected. Our (B2C) business is not back yet. It’s like 50% on the best of days… By March end, our bookings were already dwindling, going down. And with the lockdown, we shut down the app, with no bookings allowed. You can't go outside,” Shastry said.
Within weeks after the lockdown, the central government put an e-pass system in place, to allow for the movement of essential services. Between March and May, the startup found ways to re-deploy its workforce into its B2B business.
“B2B was coming back really strong. Because of the pandemic, people are shifting to contactless everything, which means contactless deliveries, contactless test drives, contactless video call inspection for insurance claim verification,” he said.
As part of the B2B push, the startup tied up commercial partnerships with e-grocery services such as BigBasket and Grofers for jobs such as delivery personnel, warehouse workers, and managers, as well as with insurance providers such as ICICI Lombard. The startup, recently, also introduced a pick-and-drop service for two wheelers.
Covid-19 skewed DriveU’s B2B and B2C business ratio at 60% and 40%. Pre-Covid, the B2B line of business already had marquee clients operating in the mobility space -- Cars24, Drivezy, Ola, GoMechanic, Pitstop, Bosch Service, CarDekho, and OLX.
Despite the B2B scale up, the startup remains focused on its core B2C business. “B2C is where we make a lot of money. We have higher margins. We have instant cash. We don’t have a lot of receivables. So we focused a lot on B2C. And with B2B, we will always sign up customers who want to work with us. That’s the strategy we had back then.”
DriveU has onboarded over 35,000 drivers on its platform since its inception with in-house training and verification processes. Of these, 70% are gig workers and the remaining 30% are full-time workers.
By the end of May, the B2C service opened for business again with pandemic-centric hygiene protocols for its drivers in place.
DriveU now aims to turn profitable in May 2021, by when it also expects to reach pre-pandemic levels of business -- about 1 lakh rides a month.
In the financial year ended March 2019, the company’s revenues increased by 9.8% to Rs 9 crore, from a year earlier. Net losses shrunk to Rs 6.8 crore, from Rs 7.3 crore. It is yet to file financials for the period ended March 2020. Prior to the Covid-19 outbreak, Shastry said, DriveU expected Rs 30 crore in revenue for FY20.
The startup is also currently in talks with existing and new investors to raise a Series B round of about $5-6 million by early next year. Since its inception, it has raised over $5.3 million from venture capital firms such as Unitus Ventures, Prapti Ventures and Stevens Creek Ventures, among other angel investors.
In terms of its cash runway, Shastry said that DriveU is currently on track with its profitability plans, sans any external funding.