Zoomcar is about to receive its next round of funding of $50 million (Rs 320 crore approximately) and the funds are going to be coming from Indian auto major Mahindra & Mahindra and Ford Smart Mobility. The latter is an investment arm floated by Ford Motor Company dedicated to funding startups and Ford Smart Mobility is already an existing investor in Zoomcar.
According to a report by VCCircle, the term sheet stands signed and the funds should roll in soon enough. The car rental startup is also being valued at around $200 million as part of this investment package.
This joint effort at making an investment in Zoomcar by M&M and Ford is being seen as part of a larger association between the two automobile companies. They have formed a futuristic “strategic alliance” through which they will work together with the ultimate objective of expanding their operations within the mobility and connected cars space in the Indian markets as well as overseas.
Coming back to the Zoomcar funding story, the understanding is that Mahindra and Mahindra’s share of this $50 million is $30 million and the remaining $20 million pumped in by Ford. Post this round, Ford will emerge as the largest external shareholder with Mahindra and Mahindra and Sequoia Capital making up the top three investors in the startup.
Zoomcar, founded in 2012, fashions itself as offering a new generation of transportation services, focusing on shared mobility and has already raised $60 million and has an impressive list of investors, including Ford and Sequoia Capital, apart from angel investors like Mohandas Pai, a former Infosys hand and even Lawrence Summers, a former Treasury Secretary of the US.
There were earlier reports that Ford was keen to takeover Zoomcar. However, with the current position being taken by Mahindra and Mahindra and emerging as a large minority shareholder, it may work out differently. Ford is said to have taken an active interest in brining M&M in. Mahindra & Mahindra has already entered into a separate arrangement with Zoomcar in order to promote its electric vehicle e2o on its platform.
Zoomcar can take comfort from the fact that it has the backing of 2 big names in the automobile business and as it plans to expand into other countries Asia and Africa and the new funding has come at the right time.