The car subscription startup Revel secures $123M
The car sales market has struggled in recent years due to the challenging economic climate. Consumers now have a wide range of options, such as ride-hailing apps, multimodal alternatives, and new propositions for private car use.
Spanish startup Revel has secured €115 million ($123 million) in funding to expand its digital car “subscription” service. This flexible lease agreement includes insurance and maintenance aimed at customers willing to commit for at least a year. The funding comprises debt and equity, with €100 million allocated to build the car network and €15 million invested in the business. Investors include KKR, Santander Consumer Finance, and others not disclosed. Enrique de Mateo, the CEO who co-founded the company with Daniel Marcos, declined to comment on the company’s valuation.
Numerous startups have attempted to introduce technology into the leasing market but have not matched customer demand with capital-intensive vehicle purchasing efforts. Some startups, such as Fair, raised significant equity and debt before crashing and burning.
However, Revel, founded in 2020, aimed to learn from these lessons and build a product that offers flexible ownership and leasing. It is important to note that Revel should be distinct from another transportation startup out of New York, also called Revel.
According to De Mateo, the startup had only raised €750,000 before this recent funding round. This money was used to test different business models surrounding the concept of car subscriptions over the past three years. However, De Mateo refused to provide any sales or other related figures for these tests and businesses, as they were relatively small.
After conducting various tests and experiments, Revel discovered that people preferred leasing. Furthermore, the leasing market is growing faster than the car sales market, driven by startups in this sector. In Revel’s home market of Spain, one year was an ideal duration shorter than the typical lease of three to four years. This was also economically more appealing than a short-term rental.
In response to the popularity of subscriptions and on-demand services, Revel added a feature allowing customers to swap cars from various options. Customers pay for subscriptions in monthly installments, and the fee includes services such as insurance, maintenance, and carbon offsetting. Revel can be accessed online or through an app, and the entire process, from ordering to delivery, takes about a week.
Revel’s business model seems promising due to the rising popularity of car leasing and on-demand services. The recent funding round will help the startup expand and reach a broader audience.
Revel, a car leasing company, provides a faster, more flexible, and more accessible alternative to traditional leasing providers. However, the company’s business model needs to be more transparent. While Revel does not purchase vehicles, no information about its sourcing and subsequent leasing arrangements is available. According to De Mateo, this is the company’s “secret sauce” that he does not want to disclose to competitors. Nonetheless, the firm has a €100 million structured financing tranche, which suggests a leasing arrangement with suppliers.
Revel’s potential lies in attracting customers who prefer to have their new vehicles but do not want to purchase them outright. In the long term, the company also provides a solution for people who need help to afford the high cost of advanced vehicles or fully autonomous cars. Leasing may become the primary option for individuals who want state-of-the-art cars for personal use.
Revel is confident in its business model and has announced funding to scale its operation.