Toronto-based driver’s education platform Kruzee has raised $500,000 CAD in pre-seed funding to fuel its Ontario launch.
According to Kruzee co-founder and co-CEO Mikael Castaldo, the pandemic revealed “the underlying structural issues” with the driver’s ed industry.
“[Traditional] driving schools are kind of stuck in their way of doing things.”
-Mikael Castaldo
In an interview with BetaKit, Castaldo argued that COVID-19 exposed everything from the general operational inefficiency of driving schools to the “shady” business practices of some of the industry’s worst operators. Pandemic public health restrictions compelled traditionally in-person and paper and pen-reliant driving schools to put together online offerings, which Castaldo claims left many overburdened.
“COVID forced all of these driving schools to go online,” said Castaldo. “And then at the same time, it said you can’t book any tests for the next few months. Driving schools that were already doing all of this manually were really overwhelmed because they couldn’t process the new influx of students.”
Kruzee was founded in 2021 by Castaldo, Ratehub’s former general manager of everyday banking, and fellow co-CEO Osama Siddique—previously head of growth verticals at Juno College and a strategy consultant for Deloitte. The Toronto-based startup aims to bring a better, more accessible and transparent driver’s education experience to Ontarians through its ministry-approved online driving school.
The company’s pre-seed round, which closed at the beginning of March, was raised via a simple agreement for future equity (SAFE). It saw participation from Toronto’s N49P, Wattpad co-founder and Chief Innovation Officer Ivan Yuen, Juno College founder and CEO Heather Payne, and other undisclosed automotive and insurance industry executives. The financing represents Kruzee’s first venture funding to date.
According to Castaldo, the driving school industry is “plagued with unsafe behaviour,” much of which has resulted from a lack of transparency surrounding government certification and instructor backgrounds.
In the past, driving schools in the Greater Toronto Area (GTA) have reportedly bent the rules by teaching drivers without Ministry of Transportation approval. The Government of Ontario has also been less than forthcoming about complaints made against industry players in the GTA.
While online driver’s education has been legal in Canada since 2013, Castaldo claims that before COVID-19 came along, “not a single online driver’s ed provider existed” in the country.
“Driving schools are kind of stuck in their way of doing things,” said Castaldo. “It took a pandemic to get them to move online, and even then, the online experience that they offer is not what students would expect from any online curriculum course.”
The pandemic has also led to a long backlog of people seeking driver’s license tests, which Ontario tweaked its requirements for earlier this year in an effort to curb.
Kruzee aims to address three problems. The first is driving instructor transparency, which it plans to provide by carefully vetting all of its instructors and publishing profiles of them online. Today, Castaldo claims Kruzee is “the only driving school where you can view instructor profiles online and book time in their schedule.”
Kruzee’s big picture goal is to “be the Ornikar of North America.”
The second is “ease of booking,” which has traditionally been done manually, while the third is helping its students access better auto insurance rates, which Kruzee intends to expand into down the road.
According to Castaldo, Kruzee’s model has already been tested in Europe with French startup Ornikar, which closed $120 million last year in Series C funding at a $750 million valuation.
Castaldo argues that there hasn’t been a comparable online driver’s education company like Ornikar in the North American market yet because of “fragmentation”—as prospective players need to win province by province and state by state, while complying with different regulatory requirements. On top of this, there are also some Canadian provinces and United States (US) states that still don’t allow online driver’s education.
In Canada, Kruzee is competing mainly against traditional driver’s education providers like Young Drivers. While there are some well-capitalized big players in the sector, Castaldo argues that the digital experience isn’t where it should be.
“The industry is made up 100’s of small companies who all have similar market share and whom have not improved the product they are offering to students in decades,” N49P Partner Alex Norman told BetaKit. He described the driver’s education market as “outdated, fragmented, and large.”
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In the online driver’s education space, Kruzee’s closest competitor is US-only EdTech firm Aceable, which offers online driver’s education but not instructor booking. Aceable has a broader focus that includes e-learning certification more broadly, including real estate.
After soft launching in March, Kruzee is now officially available in the GTA. Castaldo said the startup plans to use its pre-seeding funding to “power its Ontario launch,” which will involve recruiting more instructors to its platform and bringing its tech to “the next level.”
Kruzee has already used the capital to grow its team from two co-founders to 10 employees, and completely redesign its platform, from its website to its booking experience ahead of today’s launch.
Kruzee’s big picture goal is to “be the Ornikar of North America.” Over time, like Ornikar, Kruzee hopes to move beyond just driver’s ed to helping students get the best car insurance rate possible by becoming an auto insurance brokerage.
Feature image courtesy Kruzee.