In 2017, Kyte was born with big dreams and a bold promise: no more lines, no more paperwork, just cars that would be delivered straight to your door. And by 2022, it had seen a massive growth because it was operating in 14 cities and also raised a huge amount of funds. People assumed the future of car rentals was here, as Kyte was literally making everything easy and convenient for its customers. But something went wrong as it vanished into thin air in 2025. Let’s unfold what went wrong and find out why Kyte’s story serves as a cautionary tale.
What Was Kyte?
Kyte was founded in the year 2017 and was set out to do something huge. What exactly you may ask? Well, it had plans of disrupting the rental car industry. The service it provided was nothing in short of amazing. So here’s what made it different- while other rental services made its customers wait and stand in long airport lines which was followed with the obvious loads of paperwork. Kyte on the other hand delivered cars straight to their doors. Everything and I mean EVERYTHING was done online that is from booking to payment. Thereby, making the whole process really convenient and fast.
And the idea was actually a hit, because as stated above by the year 2022, Kyte had started operating in 14 U.S cities. And the number of vehicles was not small, it was managing a fleet of over 2,000 vehicles. Let’s talk about raising funds. That must have been the problem right? No, because had raised nearly $300 million. That too from Goldman Sachs and Ares Management, which is a huge deal.
Where Things Went Wrong
While Kyte succeeded in providing its customers a sleek experience, it faced a problem that in fact many startups face which was scaling. The problem is that with asset heavy companies, scaling can be really expensive. So, here’s what exactly happened and what went wrong, the cost of maintaining so many cars across 14 cities, burned cash faster than the company could generate revenue. Expenses> Revenue= Loss
So, by 2024 the financial cracks became visible to the outside world. Furthermore, it faced losses in key market cities like Atlanta, Boston, Chicago and Washington D.C. After which unfortunately the startup lost half of its workforce. While it did try to not give up and pulled back to its strongest hubs that were in San Francisco and New York City, downsizing was just not enough and did not help.
Here’s what Kyte’s CEO Nikolaus Volk had said that time:
“In a capital-constrained environment, where capital is super expensive, we have to focus on our strongest markets”
Everything started going downhill and the reality was harsh. In July, 2025 Kyte sold its customer list to peer-to-peer car-sharing platform Turo. And as a result of all this, Kyte fell behind on loan payments and had to enter receivership. Let me explain the same in simple if you’re wondering what receivership is….. a receivership is a court-appointed mechanism which helps the creditors recover funds. At the same time it allows companies to restructure and potentially avoid bankruptcy. Coming back to what was happening with Kyte, after entering receivership, Kyte was repossessed and liquidated the fleet by its top lender. So, in my opinion after all this the company had no option but to wind down its operations.
Customers Were Also Caught in the Same
Unfortunately, customers were also affected. There were various complaints from the travelers that had pre-booked the rentals about delayed and missed refunds. Volk told TechCrunch that he believed filing a credit card charge-back would might be the fastest way to recover funds.
Lessons from Kyte’s Collapse
Kyte’s fall highlights several broader lessons for mobility startups and investors:
1. Convenience isn’t profit
The service was convenient, customers loved the sleek experience but running a capital-heavy fleet without sustainable unit economics is always risky.
2. Investor money will run out
In this case, Kyte heavily relied on the initial funding it had raised and survived on the $300 million investor cash. So when the markets tightened, it suffered as there were no lifelines left for it to hold on.
3. The mobility sector remains unstable
Kyte is not alone, as the mobility sector remains unstable. Prior to this even a company called Getaround exited the U.S. to focus on Europe.
4. Downsizing isn’t a solution
When Kyte tried to downsize and work with only its most strongest hubs, that did not work. While sometimes it can delay the end, it cannot magically fix structural losses.
Wrapping it Up
Kyte’s story just shows us how scary the startup world is. It teaches us a lot of lessons though. To summarize what I’ve learnt- Initial funding isn’t ever going to be enough, downsizing cannot help when you’re already drowning. A company can grow and earn profits only when it’s expenses are lessor than its revenue, way lessor in fact. And I’ve learnt similar lessons from Astra’s shutdown, where rapid growth couldn’t outweigh structural challenges, so to avoid that too you can check the blog out.
