Startup Street: Flush With Funds, This Startup Is Out To Make Driving Safer

This week on Startup Street, we have an Indian origin startup that’s building tools to collect driving data and analytics to make driving safer. The finance minister said all startups registered under the Department of Industrial Policy and Promotion will be exempt from angel tax. And The Central Board of Direct Taxes has a clarification on what qualifies as a “small startup”.

Here’s what went on...

Zendrive Raises $37 Million In Series B Funding Round

An Indian origin startup is building tools that can collect driving data and analytics to improve driver safety through smartphones. And now it will do so with a fatter wallet.

Zendrive has raised $37 million in a Series B funding round led by XL Innovate and Hearst Ventures, according to a media statement. Existing investors ACME Capital, BMW iVentures, NYCA and SignalFire, too, participated in the round, which takes its total funding to more than $50 million.

The startup’s premise is simple: it uses a smartphone’s existing hardware like the accelerometer, gyroscope and Global Positioning System to measure various driving behaviours such as speeding, breaking and sharp accelerations. It returns “actionable insights”, including notifications of collisions, risk analysis and a guide, to improve driving.

But it’s not just that which had earned the startup early backing from Yahoo founder Jerry Yang and PayPal co-founder Max Levchin. Zendrive also claims to have amassed the world’s largest driving data set by analysing more than 180 billion miles to date.

“Powered by this extensive and unmatched data, the company’s AI-enabled solution is capable of generating risk models that are six times more predictive than existing industry standards,” the statement said.

The insights from this data are a treasure trove for the automobile insurance industry.

The startup’s origin goes back to 2013, when tech buddies Jonathan Matus and Pankaj Risbood, after stints of working together at Google, Facebook Inc. and Walmart Labs established it. It has an office in San Francisco, while the research centre is based in Bengaluru where all solutions are developed.

“Our world-class team of data scientists and engineers are building a technology that reduces collisions, improves road risks and ultimately saves lives,” said Risbood, technical co-founder at Zendrive. “It’s of utmost importance that we invest in our teams as they tackle important technical challenges that also have a direct social impact.”

Besides the funding round, Zendrive announced the launch of FullStop—a predictive risk solution to ensure that drivers comply with a stop sign. The solution can predict metrics like speeding and aggressive acceleration and shows that drivers who violate at least one stop sign per month are nearly six times more likely to crash.

“No one ever imagined that smartphone sensors could detect stop sign violations without dedicated hardware like dash-mounted cameras,” said Tom Hutton, who led the funding round at XL Innovate. “Zendrive’s data science capabilities are pushing the envelope from what’s conceivable to what’s now currently possible.”

With the funding, Zendrive plans to build its mobile driving safety solution, grow its team across five continents and deepen focus on the insurance market.

DPIIT-Registered Startups Exempt From Angel Tax

As part of the government’s efforts to boost economic growth from a five-year low, the Ministry of Finance on Friday exempted all startups registered with the Department of Promotion of Industry and Internal Trade from paying angel tax.

“To mitigate genuine difficulties of startups and their investors, it has been decided that Section 56(2)(viib) of the Income Tax Act shall not be applicable to a startup registered under DPIIT,” Finance Minister Nirmala Sitharaman told reporters.

While the section will still be a part of the Income Tax Act, it will not be applicable to startups registered under DPIIT, she said.

Section 56(2)(viib) of the Income Tax Act provides that the amount raised by a startup in excess of its fair market value would be deemed as income from other sources and would be taxed at 30 percent. An angel investor usually puts funds—ranging from Rs 15 lakh to Rs 4 crore—in early stages of a startup.

The ministry also decided to set up a dedicated cell, headed by a member of the Central Board for Direct Taxes, to address concerns faced by the startups. “Any startup that has an issue can approach the cell for quick resolution of problems,” said Sitharaman.

Indian Angel Network’s founding partner Padmaja Ruparel and HomeLane.com’s Founder and Chief Executive Officer Srikanth Iyer said the measures will give early-stage startups a better chance to score funding.

Vikas Vasal, partner and nation leader (tax) at Grand Thorton India LLP, said: “Removal of angel tax will go a long way in building trust and confidence in the startups and investors, and shows the government’s resolve towards ease of doing business in India and encourage entrepreneurship.”

(With inputs from PTI)

Tax Holiday For Startups

After much confusion over tax holiday for startups, India’s tax department clarified that only those startups with a turnover of up to Rs 25 crore will qualify as a “small startup” and hence, will be eligible to apply for a break.

This, however, differs from the Department for Promotion of Industry and Internal Trade’s definition that recognises startups with a turnover of up to Rs 100 crore as “small”.

“Since the intention was to support small startups, the turnover limit of Rs 25 crore was considered reasonable for granting profit-linking deduction,” the Central Board of Direct Taxes said in a statement.

Startups broadly under Section 80 IAC of the Income Tax Act are allowed 100 percent deduction of income for three years out of seven from the year of its incorporation.

The CBDT also said all startups recognised by DPIIT, that fulfill the conditions specified in its notification, doesn’t automatically become eligible for deduction under Section 80 IAC of the Income Tax Act.