It’s been a while since we’ve posted! Lots going on internally, and gearing up for a big autumn and winter. Also sorry to those we haven’t caught up with in a while… we’ll make it happen eventually.
Anyway… onto our newest portfolio company.
Problem and Solution
Tommy has just moved out to suburban Bristol (with barely a lick of public transport anywhere) and basically lives like an American suburban dad- utilises a car everyday to go to work and buy groceries, and enjoys weekend road trips to the countryside with his family. Tommy is also conscious of the environment and coupled with the knowledge that the UK (and many countries around the world) will institute petrol bans in the 2030s, would love to have the use of an electric vehicle. However:
Like most of us, he cannot afford the CapX to purchase an an electric vehicle outright
He doesn’t want to deal with the hassle of owning an electric vehicle, such as charging, insurance, and maintenance
He doesn’t want to commit to the long duration of a traditional leasing outfit, nor does he want to pay an upfront deposit either.
Many others like Tommy face the same problem. So what is the solution for those that want to hop on the electric vehicle bandwagon, but don’t have the outright means and appetite for hassle?
Enter Voltric.
What Voltric is doing is providing a flexible subscription for electric vehicles, where customers either choose between a more expensive monthly price (with anytime cancellation) or a 12 month term with a cheaper monthly price. This is a hybrid between leasing and subscription. Think of Voltric as an Airbnb for electric cars - an asset-light and flexible platform service.
Voltric provides all the benefits of traditional car ownership (can keep the car as long as you want at a decent price) with further added conveniences (comes with insurance, public charging access, repairs and maintenance, parking, tolls, etc) and low upfront costs. As soon as you finish online registration and contract payment, you choose a delivery date and the car comes right to your doorstep. In short: this might be the most convenient way to hop on the electric vehicle bandwagon right now.
All of this adds up to be a pretty good deal for the consumer. You can get the cheapest model, a Fiat 500e, for £508/month (12 month contract) or £529/month (monthly rolling), plus a one-time £199 sign up fee. This is more than 30% cheaper than the equivalent lease price of £762/month. From an internal business model standpoint this arrangement works quite well too. Partners supply Voltric with cars to manage for the duration of a user’s subscription, of which Voltric pays a monthly rental fee for the privilege. Then Voltric provides the electric vehicles to consumers with all the necessary ancillary services, and at the end of the subscription term, vehicles are returned to their partners (think of Voltric as more of a platform than anything else). Utilising this arrangement, each car is projected to generate a profit of £2532 per annum with a 14% margin per subscription.
Voltric currently acquires users through a B2B2C means, where they have made a mark by enabling employers and employees to benefit from the Salary Sacrifice scheme, providing employees with savings of between 30-60% depending upon the tax bracket. If you didn’t know what Salary Sacrifice is, it’s basically when an employee’s salary is reduced slightly in exchange for a non-cash perk (such as a Voltric subscription). Using this arrangement, they have already onboarded 32 companies, including Holland & Barrett and Al Rayan Bank.
Other initial traction metrics are impressive, and factored into our decision to invest (although we love pre-product startups, more traction doesn’t hurt). At the end of Q2 2023, Voltric generated around £39K MRR, YTD revenue of £190K+, serviced about 44 cars on the road, totaled over 100K miles driven and had over 180 customers who paid £110 to be on the waiting list (demand briefly outstripping supply). Those are some extremely good numbers for a pre-seed startup. And there is upside galore: the EV subscription market is projected to hit $15.56 billion by 2030, while the global mobility as a service market is projected to hit $40.1 billion by the same year. Securing just 1% of the market by then will net them north of $100 million if they execute correctly.
In short, we believed that this was an awesome investment opportunity for these reasons:
There are a few competitors (see “Competition” section), but no prominent player yet.
It provides an “all in one solution” for electric vehicle ownership with maximum convenience for the consumer.
It will gain a customer facing place in a burgeoning market (who can buy cars outright in today's market?).
The prices are competitive and salary sacrifice provides significant discounts, making it even more consumer friendly.
Excellent pre-traction metrics.
Brilliant team.
Competition
Anthony Pierri expounded the other day on the 3 Phases of Differentiation for competition, which to us is a really helpful model. Let’s delve into the definition of each before seeing Voltric’s place within its own competitive landscape.
Contextual Differentiation- Your competitors are “the way people are doing things today” and usually occurs when you are at the early stages of trying to build a new product-defining category. An early 1900s example would be if Ford had a pre-seed pitch deck for the Model T, its competitor at the time would be the horse and carriage because both move people from Point A to Point B faster than on foot. A modern example is when Uber was at pre-seed, its competitors were bikes, taxis, and limos.
Competitive Differentiation- Your competitors start building *roughly* a similar concept to you, so it's important to differentiate based on features, pricing, network effects and distribution. An example is how HungryPanda managed to differentiate itself from Deliveroo, JustEat, PostMates, etc. On the surface, they are all just “app-driven food delivery platforms.” However, HungryPanda is able to create its own product-market fit by offering access to small, regional Chinese dishes and restaurants, which other platforms aren’t able to do. That’s why you see HungryPanda in heavily Chinese-dominated neighborhoods around London, such as Aldgate East and Canary Wharf.
Brand Differentiation- This occurs when a product category starts to reach full maturity. In this case, most competitors will have been dropped out of consideration by popular consensus (your average consumer will only remember 4-5 different competitors in each given category), and then out of the remaining choices, branding tips the scales (as in: what do customers feel more comfortable with?). A classic example is Uber and Lyft, where Uber is seen as a more professional brand and Lyft is seen as more friendly (and ironically, built because Uber was going through a PR nightmare of its own at the time). Or more recently: Under Her Eyes 🙂.
Most pre-seed startups should aim to compete in the first two quadrants, because by the time you end up trying to build a pre-seed concept at the “Brand Differentiation” stage, it becomes extremely difficult to carve out a moat (not saying it’s impossible though). Trust, after all, is built up over years and years of consistency in customer service and quality. You end up trying to compete in an extremely saturated market, and it’s like trying to start an Italian restaurant in London; there’s so many in each neighborhood (with minute differentiations between each one) it’s like where on Earth do you start? If you’re not Gloria, Manteca, Bancone, Padella, La Mia Mamma or Circolo Popolare, you’re competing in no-man’s land.
Thankfully, Voltric sits in the middle quadrant. Compared to its competition, there isn’t so much of a difference for it to be considered contextual and too much differentiation to be considered just a branding play. It’s two biggest immediate competitors are Onto and Elmo, and here’s how Voltric stands out:
Onto
(+) Great app UX, broad car range, charging network, B2C + B2B services
(−) Most expensive, only provides monthly rolling contracts, limited mileage (750 miles a month), lack of commercial management tools, sole focus on cars
Elmo
(+) Rolling + 12 month contract options, broad car range, charging network, B2C + B2B services
(−) limited mileage (800 miles a month), no app, lack of commercial management tools, sole focus on cars
Voltric
(+) Rolling + 12 month contract options, more mileage (1000 miles a month), add ons and extras, charging network, B2C + B2B services, increased bundling, will eventually have all types of mobility/transport, will eventually build technology to underpin these all-in-one services
(−) Limited vehicle range
As we can see, Voltric is initially banking on increased service flexibility and bundling over its main competitors as a solid moat. So far, this approach seems to be working, and it’s quite easy to project Voltric’s floor being a solid third competitor in the alternative vehicle ownership space (with its ceiling being a winner that takes all). Long term, Voltric wants its moat to be its technology- whereas Onto and Elmo are purely fleet solutions, Voltric’s goal is to utilise IMS to integrate with the car and subsequently unlock parking, charging, etc. all in one app. Time will tell which end of the spectrum it ends up achieving, but this is a good start.
Potential Challenges
Potentially slim margins as costs increase
Insurance will remain a big cost and a hassle
Could potentially be overly reliant on Salary Sacrifice and will need to raise more money fairly quickly to establish a bigger footprint on this market and diversify their customer base (needs to focus more on providing businesses with subscriptions for company vehicles)
We are confident, however, that Julian and the team have what it takes to overcome these challenges and take Voltric to its highest-upside state (as expanded in the team section).
Founder + Team Potential
With a wide variety of experience that spans both industry and tech, we feel that this is the right team for the job. Julian Mensah worked for some time at BG Automotive as a Junior Product Manager and Marketing Executive. Brent Oldfield used to run LampCo and was awarded finalist of the UWE Entrepreneur of the Year Award in 2020. Phil Collins was the Senior Technology Manager at JustEat and Head of Software Engineering at Ecotricity. To add, they also have hired a Design Consultant, Head of Engineering, Head of Fleet Operations and a CFO to further enhance operations. Combining both an automotive and software engineering background gives this team the type of insights needed to really succeed in the mobility space.
What stood out to us was that we felt that Julian and his team were doing all the right things at this stage. Rather than focus on building an overly complicated product and hiring all types of expensive people (we’ve seen a few pre-seed cos make this mistake), they went straight to revenue and customer validation. As seen by the initial metrics above, they have achieved a lot on a limited runway and we’re confident that their focus and priorities will lead them to consistently make the right decisions for this business. That’s a great foundation for a pre-seed team to be building on.
What’s Next?
Further expanding on the B2B commercial side of things (providing businesses with subscriptions for company vehicles)
Expand to include micro-mobility (bicycles and scooters) and ride sharing/public transport.
Become a marketplace for all transport related activities
Raise a Seed Round to further support growth, tech, and team development