One year after winning the Minnesota Cup’s high tech division, video advertising and entertainment startup Vugo is pivoting its core business and raising $1M in funding.

The Minneapolis-based company started around two years ago with a simple idea. Passengers in ridesharing vehicles like Uber and Lyft have a lot of downtime during their commutes. Why not give them something to look at? Vugo aims to put relevant advertisements in front of passengers of car services like Uber and Lyft via tablets in the passenger area of the vehicle. Drivers provided the devices, and Vugo contributed the content, giving the drivers a 60/40 split of the revenue.

But over the last year, Vugo has been pivoting away from its original driver-focused model to one that builds partnerships with different branches of the automotive industry, including car companies, suppliers, advertisers and “fleets” like rental car or ridesharing businesses. Vugo’s video model is similar to the original, but its business partners have changed.

Currently, Vugo is raising a $1 million round of financing through Fundable, a crowdfunding platform that helps businesses raise capital through investors, customers and friends.

James Bellefeuille, Vugo’s chief marketing and operations officer, is a Minnesota native living in Oakland, California. The other four members of Vugo’s small team operate out of the company’s headquarters in Minneapolis.

Minne Inno spoke with Bellefeuille about what the startup plans to do with its new round of funding, and how it hopes to continue expanding the new B2B model.

Note: This conversation has been edited for brevity and clarity.

Minne Inno: What prompted Vugo’s pivot away from its original direct-to-driver model?

James Bellefeuille: You really have to know your market. Ridesharing gets really messy. We saw very clearly that there’s an extremely high churn rate for drivers working for Uber and Lyft. Most quit within 12 months. And that makes our business unsustainable. So we decided to focus on those making the cars, and we’re fully in to that now.

MI: Tell me more about the company’s interest in autonomy and self-driving cars.

JB: It’s really simple. We know that change is coming, and the switch to self-driving cars is going to be neck-breakingly quick. People are becoming passengers more than ever before. And to my knowledge, we’re the only company focused on passenger-centric entertainment inside the car. People are still driving, but the experience isn’t being designed for drivers any more.

MI: So what can someone expect to see if they’re riding in a vehicle with Vugo?

JB: One thing we’re doing is partnering with [Minneapolis hip-hop record label] Rhymesayers, so we’ve been playing music videos by Dessa and other Minnesota artists. And we’ll also play ads, and that’s how we monetize the product. We’re really focusing on music videos. Car radio is dead. The second people don’t have to drive the car and have their hands on the wheel and eyes on the road, all stations are going to lose value. Today, our videos are on tablets, but as a B2B software company, our vision is to be incorporated into vehicle screens. Over time, the screens in cars have just been getting bigger and bigger, and we want to be powering those.

“Having been in Minneapolis, Chicago and San Francisco, I can say that Minnesota is pound for pound killing it right now.”

MI: You’re in the process of raising $1 million. How do you plan to use the new round?

JB: We’ve raised the majority of it already, and we’ll probably wrap it up before the holidays. We’re purely focused on growth. One thing that’s held us back is the size of our team. We’ve been very lucky with the people that we have, but we’re limited because there’s only five people on our team. We want to increase the development side of our business

MI: What’s your take on the Minnesota tech and startup ecosystem?

JB: We love Minnesota. Having been in Minneapolis, Chicago, Los Angeles and San Francisco, I can say that Minnesota is pound for pound killing it right now. The hardest thing about being there is raising capital. And we would love for that to change. It’s part of the reason I’m out here [in Oakland]. It’s just easier to find funding out here. But Minnesota’s strengths are the talent and the people. They’re some of the best that I’ve ever met.