Parents often look at their young children, bubbling with interest in sport or nature perhaps, and try to imagine their lives as adults. But we suspect that when Rauno Sigur’s parents saw him snapping images of cars as a child, they never imagined this would be his career. Yet here is, Co-Founder and CEO of DriveX, with aspirations to take the company global.
“As a young boy,” he told us, “I rode around on my bicycle and took photos of cars. Now I do the same thing with technology, at scale.” The problem he and his two Co-Founders are trying to solve: how to establish the value of a second-hand car using artificial intelligence. And thus bringing the gap between owner’s expectations and the buyer’s budget much closer together.
It feels like the right technology for the right time, and it also seems that DriveX is in the right place: Estonia. This is the country famed for its digital startups, whether that’s Skype or Bolt. “Being an Estonian, I find it very important to contribute to developing a success-oriented society, while preserving the historic culture and values of the Estonian (startup) nation,” said Rauno.
Here, we discuss how DriveX came to be and what Rauno’s goals are for the next decade. If he’s right, by 2033 DriveX will be an app on every car owner’s phone.
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What’s your elevator pitch?
There are 90 million car owners across the globe who want to trade their old car for a new one. There are about 150,000 dealerships in the world who have to live up to that demand. As the new buyer generation is in town, also known as Gen Z, and a 12% surge in online sales coupled with a 10% compound annual growth rate in self-service transactions, it is evident that dealerships must embrace digital sales for trading in vehicles.
Dealerships estimate the vehicle’s value first, based on historic market prices. After that, an in-person inspection usually follows. However, the difference between the first price offer and the final tends to be quite big. This causes disappointment for the seller, as they had their hopes up for getting more from selling their car.
DriveX’s AI-powered vehicle inspection solution helps dealerships to fetch car data remotely, automatically, and as precisely as possible. Our solution enables us to detect and capture visual damages, calculate refurbishment costs and make more accurate price offers for cars to not disappoint clients. In addition, trade-in photos can be listed immediately as a sales article. With our API, dealerships can have our solution as an add-on to their existing tech stack.
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What made you launch a startup?
We three Founders [Rauno, Kentti Koppel and Valter Läll] attended the Porsche Open Innovation hackathon where it all began. Having worked for tech companies like Cleveron and Net Group, the three of us have always been hard-working and highly ambitious. It seemed like a logical next step to launch a startup as we had good chemistry and the automotive field was something we were passionate about.
What problem are you trying to solve?
Vehicle trade-ins are manual processes, which more often than not cause disappointments for car owners. Secondly, car dealerships need to digitise their operations. Ultimately, we enable a simple, trustworthy and fair way to get a fair deal on both ends.
Dealerships estimate the vehicle’s value manually and mostly in person, based on the condition report and the market prices, plus their profit/risk appetite. This causes them to lose thousands of euros per deal, either for the dealership or the seller.
So, the trade-in is the lowest emotional point of getting a new car, causing anxiety. It’s because of the difference between the first price offer and the final offer. Imagine getting an offer for 15,000 online and after an inspection, the offer drops to 10,000. Obviously, this causes disappointment for the seller, as they hope to get more from selling their car and a fair market price.
Can you talk us through your journey so far? What’s a major milestone you’ve reached?
The company was launched at the beginning of 2020 and the product was released in 2021. In our first year we focused on insurance and building our solution with clients. We decided to focus entirely on the insurance sector’s underwriting issues. At the end of 2020 we closed a $200K pre-seed round. We continued to focus on the insurance market and it paid off — we are currently dominating the Baltic states as the leading remote inspection provider.
Our clients include insurance companies from Vienna Insurance Group, PZU and ERGO. In 2022 we closed an additional $1 million investment round. In addition to insurance, we have broadened our horizons to the used car, rental and car trade-in markets and even governments.
Who are your main competitors and what distinguishes your startup from them?
Our main competitors are companies like Tractable, Ravin AI, Click-Ins and Claim Genius. DriveX’s competitive edge is unparalleled customisation, going after the mid-market and adding new data sources other than visual assessment to understand the vehicle’s current condition remotely. Our clients can tailor our vehicle inspection solution out of the box exactly to their needs and current situation.
Secondly, CEE [Central & Eastern Europe] startups are famous for being several times more capital-efficient. Being clever and having grit will pay off in the long run. A good example is our very own Estonian unicorn Bolt, which is beating Uber at their own game in many international markets.
How has the startup scene in Estonia helped and/or challenged your own startup’s development?
Estonia is known as a startup mecca as we have the highest number of startups per head of population (and ten unicorns for a country with only 1.3 million people!). It is only fit for Estonia to have a strong and supportive startup community and based on our experience, we can definitely agree to that.
Some of our angel investors are from Estonian unicorns and we’ve received a lot of hands-on advice. The Estonian Founders’ Society creates unbelievably good access to shared knowledge, contacts and capital — something that larger countries obviously don’t have. We stick together!
Where do you hope your startup will be in ten years?
We aim to become the single point of truth about a vehicle’s condition across a hundred markets. Our mission is to eliminate dishonesty and waste through meritocracy and playfulness. DriveX is a household name for consumers and companies alike.
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