SIG leads Series B-plus for China car-sharing platform Togo
Chinese car-sharing platform Togo has received millions of US dollars in an extended Series B funding round led by Susquehanna Asia Investment (SIG), with participation from ZhenFund and Crescent Point. It takes the company’s total funding since inception to around RMB500 million ($72.8 million).
Togo previously received RMB10 million in seed capital when it launched in 2015 and a RMB22 million investment from Tuopu Fund the following year. ZhenFund participated in a RMB40 million round in April 2017 and then returned six months later with SIG for a $22 million round, according to AVCJ Research.
The Togo business model differs from traditional car rental service providers in that it charges users based on the amount of time they spend in vehicles and allows them to return these vehicles wherever they like. The company focuses on tier-one and tier-two cities, most of which limit the number of car registrations issued each year and ban cars with non-local plates from the roads during peak times. These measures have pushed up demand for car rental services.
Togo has a presence in Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu and Xi’an, providing cars ranging from BMW Minis to various types of SUV. Users access cars by identifying an available vehicle and scanning a code with their smart phones once they locate it. However, the company recently introduced a car delivery service in Beijing. The average number of orders per day is five, with customers using the service an average of 12 times per month.
Togo claims its Beijing operation has been profitable since July, while it is breaking even in Shenzhen and Xi’an. The company wants to roll out more than 1,000 vehicles in each city and improve vehicle management through artificial intelligence and big data.
China’s fragmented car rental market is populated by more than 1,000 companies. There are a handful of very large players, including affiliates of state-owned carmakers such as Shouqi and Dazhong as well as private players like China Auto Rental (CAR) and eHi Car Services. Meanwhile, earlier this year ride-hailing platform Didi Chuxing formed an alliance with 12 carmakers to build an electric vehicle sharing network.
CAR and eHi both received private equity funding ahead of IPOs in Hong Kong and the US, respectively. EHi is currently the subject of competing take-private bids at a valuation in excess of $900 million.
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