BrazilEY advises Latvian car sharing start-up Carguru on first investment round
Carguru, a car sharing start-up based in Latvia, has successfully completed its first investment round. With the backing of car dealer network Amserv, Carguru aims to triple its fleet in the coming year and expand internationally. The start-up’s capital raising trajectory was advised on by merger & acquisition consultants from EY Latvia.
Since its founding in May of 2017, Carguru has seen rapid growth. The start-up offers people in Latvia’s capital city of Riga the opportunity to rent a car for a short period of time. Using an app, customers can book, unlock and start a car, and then drive the car as long as they want – Carguru does not set any time restrictions on rental. That also means that there is no minimum rental time, with clients charged on a pay per use basis through an all-in fee, which includes expenses for mileage, car parking and insurance.
To date, Carguru has grown its user database to over 9,000 users, who combined have completed over 50,000 rides. In a bid to accelerate its growth trajectory, the start-up's founders tapped the services of EY, which was given the task of guiding it through a capital raising round. “When searching for investors, our goal wasn’t only to find a financial partner, but a firm with which we have versatile synergy. This is why we were searching for partners in the auto industry,” explained Vladimirs Reskajs, who leads Carguru.
Together with corporate finance experts from EY Latvia, which is the local member firm of one of the globe’s largest professional services groups worldwide, Reskajs had discussions with “many potential investors,” he said. A subsequent due diligence on interested parties found that Amserv would be the best option to partner with, and not long after that, an agreement was signed by both parties.
Amserv is a large car dealership in Latvia that represents top brands such as Toyota, Lexus, Peugeot, Opel and Chevrolet. Commenting on the transaction, of which terms and conditions have not been disclosed, Amserv director Armands Vimba said, “The auto industry is changing. Today, trends show that people are choosing to not have cars at their homes but rather use cars only as needed.”
This trend, known as car sharing, is booming globally. According to a projection by management consultancy Roland Berger, the market is growing at between 30% to 35% year on year between 2017 and 2020, and while the industry is still in its nascent stage, it will by 2020 be worth more than €7 billion globally. The development has seen interest in car sharing platforms spike. Last year for instance, Snappcar, one of Europe’s largest car sharing players (30,000 cars), received €10 million in funding from among others French car rental giant Europcar. “Carguru has the potential to revolutionise the car sharing industry,” said Vimba.
With the capital injection, Carguru aims to increase its vehicle fleet from the current 70 to around 300 by 2019. In addition, Carguru hopes to leverage Amserv’s position in Estonia to pave the way for its market intro into Latvia’s neighbouring country.
Meanwhile in Latvia’s consulting industry, last month technology consultancy Cognizant formally opened a new delivery centre in Riga.
