Splend founder Chris King is planning to expand his company that leases cars to Uber drivers. Janie Barrett
by Misa Han
An Australian start-up that rents cars to Uber drivers has secured $3 million in funding from specialist lender Investec, a deal that values the 18-month-old company at $28 million.
Splend chief executive Chris King, who has so far self-funded the venture, said he would use the investment to improve the company’s cash flow, roll out new vehicles and launch a new app for its members.
Mr King declined to comment on the size of the deal, but sources said Investec took a 10.7 per cent equity take in Splend through placement of new shares.
Splend has 1300 Uber vehicles on the road in most Australian capital cities and provides car and insurance to Uber drivers at $269 a week. The company is aiming to hit “multi-thousands” by the end of the year.
Mr King said Splend provides Uber drivers with “everything except the fuel and tolls” including the vehicle, registration, third party insurance, maintenance and accident management, which distinguishes it from traditional car hire or financing companies.
“The car is just the entry point. We’re providing the product at the price that is equal to or cheaper than if the members try to do it themselves,” he said.
He said the company also has no lock-in contract – drivers have to hire the car for six weeks’ minimum and can terminate the contract by giving two weeks’ notice – which makes it an option for Uber drivers who do not want to be burdened with a car loan.
“If you buy a car you are locked in for four or five years. If you break the contract the bank or financier doesn’t want the car back, so you have to pay thousands of dollars just to break the contract,” he said.
He said Splend was eyeing rolling out its business model globally.
“We’re going to be focusing full steam ahead domestically, but we also have the opportunity to expand into New Zealand and we’ve done significant market research. We are also in discussions with global businesses that want to bring our model to North America and the United Kingdon,” he said.
Mr King said while the majority of its drivers provide ride-sharing services, the rise of food delivery apps, such as UberEATS, had added to the growth of his company.
Mr King is a serial entrepreneur with a background in event and equipment hire businesses and also did a stint as a staffer for the West Australian minister for transport, and CFO of electrical contracting business KP Electric.
He said the business would not be significantly affected by the Federal Court ruling last week that Uber drivers had to pay 10 per cent GST from the first dollar they earn because most of its drivers were full-time drivers who earned above the $75,000 tax threshold.
“We think it’s very unfair, it doesn’t take into account the modern realities of small businesses,” he said.