A group of three Notre Dame students have raised $300,000 for a startup aiming to compete with Uber and Lyft on college campuses.
Racing to win market share, Desi founders — juniors Liam Redmond, Zach Brown and Rob Corrato — want to create a marketplace where college students who want rides can meet student drivers who are willing to give them. The goal is to make rides safer and cheaper.
Desi is slated to launch on Notre Dame, Saint Mary’s and Holy Cross campuses on Sept. 30. The app is now available for download. A school email address is required to create an account.
“Desi connects students to safe, affordable rides provided by their peers,” founder Liam Redmond said. “We’ve essentially eliminated strangers from our network.”
Unlike big name competitors, Desi restricts its platform to college students and generates revenue through driver subscription fees. Desi does not broker transactions like Lyft and Uber. Instead, drivers make 100% revenue from each ride and pay a $19.99 per month subscription fee.
An idea that began when juniors Liam Redmond and Zach Brown started chatting in the dining hall stirfry line nearly two years ago has become a full-fledged corporation with investor backing.
PivotNorth Capital led the pre-seed round, and the IDEA Center helped the students connect with potential investors and kickstart efforts with a $4,000 grant. Before meeting their $300,000 fundraising goal in early September, Desi conducted a closed-beta test that involved more than 450 students.
Redmond said Desi wants to use the money to “knock Notre Dame out of the ballpark” and expand to more college campuses. The pre-seed funds will help market the app, develop the technology, fund operations and expand to new campus locations.
“The big problem that we’ve really noticed is that the current options have lost their reputation for providing safe rides,” Redmond said. In the last few years, students have also had to pay surge rates that often rise over $20 for just a few miles.
Desi wants to solve safety and cost problems by setting up a college-exclusive platform that is open only to Notre Dame, Saint Mary’s and Holy Cross students — both those searching for a ride and those who want to make extra cash by driving their peers.
Redmond predicts that ride costs will be significantly lower than other options, in part because Desi has a much lower cost to acquire customers. Especially outside of urban areas, Uber and Lyft face difficulties recruiting and retaining drivers. Desi’s initial tests suggest that finding drivers won’t be a problem.
“We really noticed how important these tight-knit social networks are, and how quickly word of mouth can spread,” Redmond said.
Drivers will make more than minimum wage and often more than the University’s $15 an hour rate, he added.
Many tri-campus students are wary of driving for apps like Uber and Lyft. By restricting users to only college students, Desi hopes to tap into a wider driver base. Drivers can break even after two or three rides per month, Redmond added.
“We’re able to unlock a whole new demographic of folks who are willing to provide these rides,” Redmond said.
To ensure safety, Desi conducts interviews with each driver and checks driving and insurance records.
Once the platform launches, Desi’s goal is to maximize the number of riders and drivers who sign up for what Redmond calls the “no strangers, no surge” ride experience.
Early stage investors say that though Desi’s business model may change, they believe the founder will create a better solution for rides on college campuses.
“With startups, you have to focus more on the people who put it together than the actual business plan,” said Jeff Racho ‘91, an investor and business-focused attorney who contributed to the pre-seed round. “I could just tell right off the bat that they were really thinking things through, especially for 19-year-old students.”
Through investment firm Wray-Cho Investment Company LLC, Racho contributed to the pre-seed round. A lawyer who often helps startups navigate legal considerations, Racho has been working with the Desi team for more than a year.
“Uber and Lyft are great if you’re in a high density area. But if you’re in an area like South Bend, it’s a pain to get the rides,” Racho said.
Racho compares Desi to ride boards, physical boards where student drivers and riders could find each other, that were used on campus before the 2000s.
“What’s cool about Desi is that it’s replicating the ride board instead of replicating Uber,” he said.
Tim Connors of PivotNorth Capital, an early-stage software-focused venture capital firm that works with many Notre Dame startups, agrees that Desi is solving a problem.
“Students spend a pretty significant amount of money on Uber and Lyft, and they don’t like the drivers,” Connors said. “Here’s a solution that allows students to get a safe, comfortable ride, and allows other students to make about twice the minimum wage.”
The Notre Dame Venture Capital Club also put $5,000 into Desi, the club’s first-ever investment in a student-founded startup.
Desi’s founders don’t expect immediate profits, but they are optimistic that the model will scale on the tri-campus and other college campuses across the country.
“This thing is very exponential growth. We will certainly not be profitable right out the door,” Redmond said.
In that process, founders Liam Redmond, Zach Brown and Rob Corrato are making Desi their top priority.
“It’s basically two full time jobs plus overtime — being a founder,” Redmond said. “It’s an incredibly difficult balance.”
