Lessons learned by Virtuo's CEO from launching his first business in the financial crisis

Virtuo CEO Karim Kaddoura

Karim Kaddoura was "raised in car dealerships," working his first summer internships with mechanics in the garages owned by his parents, who have been in the business for 35 years.

So it felt "natural" for the entrepreneur to stay in car retail when it came to setting up his first business in Paris, France in 2008.

Neowebcar is the French equivalent of online marketplace Autotrader but for new cars, which Kaddoura built and then sold to France's leading used car seller, l'Argus in 2014. L'Argus had been an early-stage investor into Neowebcar.

Setting up and building a business in the midst of the global financial crisis, when investment capital wasn't "abundant," was a learning curve for the entrepreneur.

In this environment, Kaddoura said he learned how to run a business in a "lean" way, in terms of balancing cost and innovation.

"You don't want to be crazy about spending too much money on a business where the economics just don't add up," he explained.

Having less investor capital readily available also taught Kaddoura that "growth is not the number one factor" in building a business.

Though he said this had changed in the last five years, with the increase in global companies taking their businesses public by listing on international stock markets.

"The good thing that's been happening lately with different stories of IPOs (initial public offerings) of well-known companies is that there is an understanding that growth is important," he said.

However, he reiterated the importance of focusing on the basic economics of running a company, such as proving to investors that a business can make a profit.

Being humble is something else Kaddoura learned from running his first business, by treating employees as shareholders in the company, for example.

Starting a business during an economic downturn also taught Kaddoura to "find hacks" as a way to control costs in operating parts of the company such as marketing, as well as developing an ability to multitask by initially taking on different roles in the business.

'End car ownership'

The second time round, when launching Virtuo in 2016, Kaddoura said the process for setting up a business was much quicker.

By this point, he said he knew "how to talk to investors … the importance of having talent and making sure you hire the best."

One of Virtuo's main investors is U.K.-based venture capital (VC) firm Balderton, which has backed the likes of personal banking app Revolut and transport planning app Citymapper.

Balderton, along with fellow VC firms Iris Capital and Raise Ventures backed Virtuo's "series B" funding earlier this year, raising €20 million ($22 million), according to TechCrunch.

Series B is typically the expansion phase of funding for startups, with this money reportedly being used towards Virtuo's growth across the U.K. and in other European countries.

Virtuo were unable to disclose any earnings at this time, when contacted by CNBC.

Virtuo was initially aimed at improving the process of renting a car, which included digitizing the laborious administration involved.

Another often-complained about area with car rentals is customers not getting the car that was initially advertised, something Kaddoura wanted to fix with Virtuo by ensuring that users get a "premium car, every time."

To use the service, customers only need the Virtuo app – now closing in on a million downloads - which acts as a key for the car, in addition to real-time tracking of fuel usage, mileage and damage reporting powered by artificial intelligence.

Since its launch in France, Virtuo has expanded into the U.K., Belgium and Spain.

In addition to its geographical expansion, Virtuo's mission has also become more ambitious — Kaddoura aims to end personal ownership.

He cited a 2018 study by Cox Automotive, the parent company of Autotrader.com, which found nearly three-quarters of baby boomers believe that owning a vehicle is necessary, compared to just over half of millennials.

Looking forward, Kaddoura believed people would rely on a bundle of digital mobility services as replacement for car ownership.

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