Fast growing market: 99 Ukrainian investors invest in innovative car subscription service

Ukrainian venture syndicate Toloka.vc has announced another investment. This time, €1 million went to German startup FINN.com, which is developing a car subscription service. The company is growing rapidly in its home country and plans to expand into the US market. The car subscription market has shown steady growth and good returns over the past decade. It is expected to grow by 10% annually in the near future.

"We believe that car subscription services are an up-and-coming niche," said Tolokarepresentatives. "Uber changed the taxi market. Today, a similar revolution is happening in the car subscription market. Car subscriptions are something between leasing and owning a car. It's a very convenient model and we, the younger generation, understand it. The growth figures of the project support our belief.

FINN.com is an online car subscription and sales service that simplifies the traditional car buying and leasing process through a convenient e-commerce platform for B2C and B2B customers (dealers). The services cover everything from car selection and delivery to insurance and regular maintenance.

The investment in FINN.com is the fifth deal for Toloka. The syndicate started operations in May 2023, but the first investment took place in October. The minimum check from a participant of the investment syndicate was €4500 ($4900). At the time of publication, many well-known venture partners had joined Toloka and the syndicate had six closed deals, the list of which can be found on the website.

Comparison of carsharing and car subscription services

Car subscription is a new global trend that has evolved from carsharing (literal translation: shared ownership of a car) and is gaining momentum in global and especially European car markets. It allows users to have a car for a fixed monthly fee for a certain period of time. Subscriptions can last from a few months to several years.

Despite the differences, car subscription services and carsharing have many similarities, and their development is interconnected. Over time, car subscription services and carsharing may become more competitive with each other as they offer similar services. This could lead to lower prices and better quality of service for users.

In 2018, Forbes published a prediction that by 2025-2026, car subscription programs could account for nearly 10% of all new car sales in the US and Europe. It also predicts that by 2025, more than 16 million cars will be available for subscription, with one in five being new.

McKinsey & Company, a global leader in strategic consulting, noted in its shared mobility research report that more than $100 billion has been invested in shared mobility companies since 2010. In addition to carsharing, examples of shared mobility include bike rentals, scooter rentals, and organized carpooling and travel.

"Looking deeper into types of investors, it’s not the automotive players that are investing in shared-mobility companies. Instead, around 72 percent of the total amount of disclosed investment since 2010 has come from venture capital and private-equity players, suggesting a bet on the future rather than on established and already sustainable business models. Tech players are second at approximately 21 percent, while automotive-company investments amount to approximately 4 percent," the report states.

In this context, it is worth mentioning that in 2020, during the COVID-19 pandemic, the American carsharing company Getaround Inc. raised an additional $140 million in venture capital funding.

In terms of further market development, according to the German marketing company Statista, the number of carsharing and car subscription users worldwide is expected to grow to 63 million by 2027, and global revenues will increase to €15.25 billion ($16.61 billion).

Germany leads the shared mobility market in Europe

Germany is the largest carsharing market in Europe. As of January 1, 2024, carsharing services were available in 1271 German cities. The country has approximately 5.5 million registered users of such services. In 2024, Germany is expected to earn $0.87 billion from the carsharing market. Statista predicts that revenues will grow by 4.56% annually, resulting in a market volume of $1.04 billion by 2028. The number of subscription and carsharing service providers in the country is growing: at the beginning of 2024, there were 293, an increase of 44 operators from the previous year.

According to the Bundesverband Carsharing, German providers continue to lead the way in the transition to electric vehicles. By January 1, 2024, 17.8% of shared cars in Germany will be electric.

Features of FINN's car subscription service

The German startup FINN, in which Ukrainian investors can invest through the syndicate Toloka.vc, offers a subscription service for electric and hybrid cars. The company was founded in Munich in 2019, and since February 2022 it has been growing rapidly in the US market.

FINN's management team consists of people with diverse and complementary experience, ranging from the automotive industry to marketing and engineering. One of the company's core values is caring for the environment, so it offsets all CO2 emissions from its fleet based on average vehicle consumption.

FINN offers top brands such as Alfa Romeo, BMW, Fiat, Jeep and Audi. The company offers fast and flexible subscriptions for selected cars through a mobile app.

In recent months, the startup has introduced a new four-tier loyalty program and launched a customer chatbot integrated with the company's help center.

Toloka appreciates the potential of investing in FINN, which has shown very rapid (100x) and stable growth over the past three years. This is in line with the investment strategy of the syndicate.

The project has a high annual subscription income, which translates into high profitability potential in 2024. There is a good chance of a quick exit with a high multiplier and possible high investment returns within a few years.

"We tell our partners about a projected profit of X2-3 on invested capital and a planning horizon of 3-5 years. In annual percentage terms, this is 20-25%. The average investment cycle is usually eight years. Since we invest in later stages of project development, we expect exits from invested projects in 3-5 years," says Taras Kyrychenko, general partner of the Toloka.vc syndicate.

Some specific plans for FINN's future include:

- Launching the subscription service in ten new European cities over the next two years;
- Increasing the electric vehicle fleet to 50% in the next five years;
- Introducing autonomous vehicles within the next ten years.

How the investment syndicate works

The Ukrainian venture syndicate Toloka.vc is an association of private investors who wish to have a diversified and balanced portfolio of venture investments. Currently, over 800 investors join Toloka's founders - financier Taras Kyrychenko, businessman Oleksandr Kolb (Ukraine) and professional venture investor Igor Shoifot (USA) - to invest in fast-growing and scalable global companies.

"I've wanted to do this for a long time - help friends and partners have a quality investment portfolio," says Taras Kyrychenko about founding Toloka. "Igor has tremendous investment experience. And Oleksandr is a marketing guru who has been in business for over 20 years.

Oleksandr Kolb emphasizes that Toloka.vc is a Ukraine-centric syndicate.

"Two projects we have invested in - NewHomesMate and Gine-Bikes - have Ukrainian roots, and part of the funds go to support the Ukrainian Armed Forces. We are always open to supporting Ukrainian projects, even if we are not investing," adds Oleksandr Kolb.

Toloka.vc brings together private investors who make venture investments, meaning they invest in promising innovative startups. Of course, venture investments carry certain risks. Toloka assures that they carefully select projects to invest in, strictly adhering to the strategy of investing only in understandable businesses.

"Funds are invested only in companies with verified sales of at least $1 ARR, stable growth, a formed team, and a focus on several markets. These are mostly investments in A+ round projects. The FINN project is no exception, which, according to the official release, raised $100 million in round C," says Igor Shoifot, one of the syndicate's founders.

Individuals who want to create their diversified and balanced portfolio of venture investments with the help of market professionals can become partners of the syndicate. The syndicate founders select projects in which they themselves invest. Partners receive comprehensive information about startups but are not obligated to invest in each one. Based on the received data, they make their own investment decisions. The syndicate guarantees transparency in its work, legal support, and investment administration. The minimum investment amount is $5000.

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