Kyte, a company that delivers rental cars to customers on-demand, closed an asset-backed credit financing of up to $200 million from Goldman Sachs and the Ares Global Management Alternative Credit Team to accelerate the company's fleet growth and margin expansion. Kyte and its financing providers will create a more robust trip economy that services a more demanding customer with a shared vision of an electrified, autonomous future. Ludwig Schoenack, co-founder and co-CEO of Kyte, joins Cheddar News' Closing Bell to discuss.

Closing Bell

Rental Car Delivery Company Kyte Raises $200 Million in Debt Financing to Grow Fleet

cheers With a tap of your finger, you can hail a ride from pretty much anywhere. So guess what, the top of your finger, you can now rent. That ride Kite is an on demand car rental service that just secured a $200 million dollar line of credit from Goldman Sachs in areas, joining us now to discuss the co founder and co ceo of kite, Ludwig shoe knock and Ludwig, thanks for you. Thanks so much for being here. So can you share more details about what kite does and also the name you have for the drivers? Wonderful. Yeah, thanks for having me. Um, I mean, so the name for the drivers of surfers, um, their, their kite surfers, um, you know, they deliver the cars and if you press the button today on your phone as you described, um, you get the car delivered to your door on demand and that's, you know, really a fairly simple concept as we believe, right? We borrowed from, you know, the insta cards, the ubers, the doordash, the gold puffs right today, consumers are just incredibly, you know, have incredibly elevated consumer expectations. They want the cars delivered to their door, right? They don't want to stand in line, they don't want to necessarily own it um, in, in this day and age. So, you know, we thought if there there needs to be a better way to, to, you know, access cars when you live in cities and that we believe is that the type of the button on demand and um, you know, you get it delivered and when you're done, you get picked up again. So kite that seems like a simple concept, but there's some bigger things here that I want to talk to you about because kinda said they're hoping to replace car ownership. How well we believe when you live in a city you have certain transportation needs. Some of them are met by micromobility, some of them hopefully are met by walking, some of them are met by ride share. Some of them are met by future modes of transportation that are being developed. Think of on demand, on demand transit or demand responsive transit or um autonomous taxis that are emerging in our home city of san Francisco for example. Um but there's always a use case that will take you beyond the city limits. Um, you know, calling in from from tau in California. So obviously, um, there's um, you know, there there are ways to get out of outside of the city where you know, these all these use cases. Um, all these modes of transportations won't take you. Um, so there we believe you need a similarly simple um similarly straightforward and hassle free way to get around and that for us is still kind of the last missing piece. Um that upholds car ownership as it is today, people are, you know, now more than ever rethinking whether they need to own a car Um, when they might use it, you know 25, 30 times a year and if there was a solution that was really as simple as owning the car because it is right at your doorstep right outside your door as if you had it parked. Um, you know, just outside we think that that product will, will, um, will kind of tip tip tip over the customer sentiment towards, um, not needing to own a car, but getting it on demand through. So does it work with you having your own inventory or are you working with the rental car companies? You're essentially just the delivery middleman for it. Um, we believe in order to really fundamentally change in industry and fundamentally make a dent and really get it right. You have to own everything from the consumer experience, you know, all the way through the real operations and the real assets as a company. We're leaning into both right into the full technology stack, into the full operation stack and it's really, you know, the combination of all of that that makes the magic, um, come together that every little detail, um satisfies and exceeds customer expectations. So we, we do go into the full assets stack and are part of the partnership with government and Aries is a big part of this. Yeah, I was gonna say $200 million dollars is a nice chunk of change. So what are you planning on using that money for? Well, we'll grow our fleet. Um, you know, we've not been able to keep up with consumer demand throughout our cities today, we're in 14 cities across the country. Um, that number is growing faster and faster. We're seeing demand from, you know, the cities that were not in, um, we're seeing growing demand that far exceeds our supplies. So we had to make a change, we had to find, you know, a real source of financing, you know, for these real assets in the real world And um, Goldman, Sachs and Aries, you know, um, you know, areas being the biggest private lender, goldman being one of the biggest, um, public lenders in the world, um, where the right capital for us that allows us to scale from now, you know, to roughly 10,000 vehicles to um, to where we want to be, um, as the largest provider of shared transportation. So when it comes to kite, you said that it possibly the service could lead to be more sustainable to a more sustainable future. How are you doing that? Are the, are the cars, some of them electric? Or is it because you're hoping that folks will need to buy a car, which means they don't have to admit as much carbon into the air because they're only renting a car when they need it. It's exactly those two. So on the one hand, we believe in a fully electrified future and we don't think that, you know, customer sentiment is there today where, you know, they're barriers to entry today. The tv is still more expensive than a comparable ice engine. And we're able to, you know, kind of be part of that paradigm shift where people will want to use car, will you want to use electric cars, but they don't necessarily want to buy one today. And that's where we come in. On the other hand, you know, cars today are underutilized 98% of the time. Most people buy cars. And the hard truth here is that they stand outside of their door idling for most of the time because they don't need them, and with you know, the transportation landscape evolving ever more rapidly over the next decade, we think that will be more and more the case. So there will be more people that want to opt out of that kind of antiquated system of car ownership and make way in cities for, you know, better uses. And and we think, you know, we can all think of our own ways of how we can better use city space, right? There might be bike lanes, that might be, you know, public parks, but but certainly not, you know, cars sidelined um, with cars. So Kite says they eventually want to offer autonomous transportation as well. What would that look like? And when will we see that? Well, that's a that's a billion dollar question. We don't think, I don't think I have a strong view on the timeline, but for us it's also, you know, of lesser importance. We are on our way towards autonomy with every mass manufactured vehicle today, we're getting closer and closer to level three, level three plus level four autonomous features within those vehicles. So even that you're, you know, you're going to buy an upgrade in a Tesla today that will get you, you know, on large stretches of highway, um, um, distances without your hands on the steering wheel. Right? And that for us is something that brings a change to the way we travel. Um, and ultimately, even, you know, let it be 5, 10 or 15 years of, of of one. Um, when autonomous transportation will be, will be feasible and and kind of available to the masses. We still think you're not going to own that autonomous vehicle and put it outside your door because you might need an suv one day, you might need a, you know, a smaller car the next day. Um, and then another one for for your third trip. So we believe kind of shared is here to stay and autonomy will just be a part of that evolution. So Domino's right now, the pizza places offering customers who go pick up the pizza $3 to do it because they obviously want customers to replace the delivery driver. In your case, there's someone delivering my rental car. So am I paying more for that, compare comparing the price of meat, going to say it hurts and picking up a car or me using kite, what is the difference in price if there is any. So domino's and herds have a legacy problem. They have put all these branches all over the country and violate, don't opine on, you know, the, the interior and, and, and the, the how pleasant it is to go to a domino's pizza place. I certainly can say most of us don't love going to hart's location, right? You stand in line, you fill out the paperwork, you feel like you're getting screwed a little bit on the insurance and maybe on the gas prices, right. And and all of these things aren't something we were going to return to during the pandemic. This came to a standstill. People realize there are better ways to get a car, you get outside of your door, you get tossed the key, the surfer takes the scooter out of the trunk, takes off to their next trip. That's delightful. And that's what we, how we designed the experience, the traditional experiences designed around the infrastructure coming back to your question that infrastructure is in place and they have to pay it off. Right. So we never had that infrastructure. So we're able to have a pure delivery system. Think of it like Instacart doesn't have any owned stores, you know, Uber doesn't have any taxis. Um, and so we're able to offer a price, competitive, similar price product, much better quality without having to charge people extra? The delivery charges basically offset by us not needing the physical infrastructure that some of the legacy providers of car services have to struggle with. Are you guys in new york city? We are, I think I might have to do a story with me doing this whole kite thing because it's very interesting cause a lot of new Yorkers, even me, I only use my car on the weekends because I commute via public transit. The car is sitting there. Maybe I don't need to own a car. Opened my eyes, he opened my eyes, co founder and co Ceo kite served. It was awesome to meet you. Thank you so much for being on.