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South African tech startup FlexClub, a car subscription marketplace, has secured $5-million in a seed round of funding led by Kindred Ventures.
FlexClub secures $5-million in funding
According to reports, the funding will be used to further scale up the automotive tech startup’s innovative platform that provides a one-stop-shop for consumers wanting to purchase a vehicle.
Tinashe Ruzane, co-founder and CEO of FlexClub explains that the startup has attracted a large pool of investors due to its innovative business model that provides an effective solution to a challenge faced in the automotive industry.
“With seasoned and highly respected VC investors like Kindred Ventures, CRE Venture Capital, and Endeavor getting behind our mission, we’re well placed to usher in the future of how people get cars in markets like Mexico and South Africa and the support from prominent angel investors, like Matt Mullenweg (founder of WordPress), Federico Ranero (COO of KAVAK), Tariq Zaid (formerly of Shopify and Getaround) and Ron Pragides (formerly of Twitter and Salesforce), further validates the incredible global opportunity for our technology to reimagine commerce in the automotive industry.”
Founded in 2019 by Marlon Gallardo, Rudolf Vavruch, and Tinashe Ruzane, the South African-founded automotive tech startup has created a platform that allows South Africans to purchase or rent vehicles at a subscription fee.
This fee is all-inclusive of both insurance and maintenance.
“Our members are drawn to the fact that, in just a few clicks, they can get flexible access to a car that suits their needs in under a week. Members can choose vehicles from an array of reputable partners, without the need for large upfront deposits, high balloon payment obligations, or rigid long-term vehicle finance contracts; and they always have the freedom to buy the car, return it, or swap it at any time, without incurring any penalties or unexpected costs,” explains Ruzane.
The tech startup has partnered with both local enterprises and international conglomerates, most notably Uber in South Africa and Mexico in 2019 and the most recent collaboration with Avis in the Drive Now Buy Later system. These partnerships have full throttled the startup to create unique models.
Vehicle Partners, including existing car rental companies as well as fleet providers, use the marketplace offered on FlexClub to provide car subscriptions to commercial and private members in markets.
Consumer behaviour has drastically shifted due to the pandemic, causing eCommerce to accelerate in the automotive industry.
FlexClub’s digital subscription model closes the gap between car rental and auto retail companies as it offers an alternative to traditional car loans.
The subscription allows members to swap a vehicle, buy the car, or cancel their subscription at no additional cost.
“Our partners recognise the opportunity to work with FlexClub to look beyond just driving unit sales of vehicles and transition towards building deeper relationships with customers through this service-driven approach. All while diversifying away from the reliance the auto industry now has on consumer vehicle financing to drive revenue,” he explains, “and the buy-in we have seen from partners like Avis and other major automotive distributors, demonstrates that car subscriptions are finally emerging into the automotive zeitgeist,” explains Ruzanne.
Featured image: Marlon Gallardo, Rudolf Vavruch, and Tinashe Ruzane, founders of FlexClub (Supplied)