As state economies open, allowing more short-distance travels, Getaround has a plan to catch up with the demand. The Silicon Valley car rental startup announced it has raised $140 million in a Series E deal, to bring its total venture funding to $600 million.
The funding was led by PeopleFund, followed by new investors including Reid Hoffman and Mark Pincus’ Reinvent Capital, AmRest founder Henry McGovern, pennant Investors and VectolQ partners Steve Girsky, Mary Chan and Jualia Steyn also deploying capital. Old investors backing the deal are SoftBank Vision Fund, Menlo Ventures etc.
Getaround is a car rental company that allows customers to instantly rent cars through its app. The startup is available in more than 100 cities and is rapidly expanding.
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The new fund is a sign of rebound after the company was hardly hit by COVID-19 pandemic, which forced it to downsize and lay off 150 employees.
But while the pandemic which hampered other rental businesses was mainly to blame, Getaround CEO Sam Zaid said the company’s troubles were compounded by struggles within SoftBank, which did a $300 million Series D round in the company in mid-2018.
Zaid told TechCrunch that although SoftBank was having its own troubles, the Japanese conglomerate has been quite helpful.
“SoftBank has been an extremely supportive partner to Getaround at every critical stage of our journey this year including in January and through COVID,” he said.
A shift in the story came following the lifting of lockdowns that allows people to embark on inter-state trips. Many chose car rentals over flights for fear of contracting the virus. Getaround saw an opportunity to turn around its business as demand for car rentals grew.
The company’s services are offered based on contactless access to passenger cars, an appealing strategy that drew many commuters to the company. There was a rapid increase in demand for Getaround cars as local joints open and people looking for a way out of the lockdowns’ boredom jump on it.
Zaid said that by July 1, Getaround rehired all of its furloughed workers. He said Getaround has witnessed worldwide revenue more than double from its pre-COVID baseline, and gross margins continue to improve.
The company explained that the fund raised in the summer will be used to help the business invest in car technology, bring on new partners and reach global profitability.
Getaround now has more than six million customers worldwide and hopes to add to the numbers as coronavirus continues to spike in Europe.
The company also announced four new executives following the new deal. There are: Dan Kim, head of North American business. He formerly was the head of Airbnb plus and head of global sales and delivery at Tesla; Laura Onopchenko, CFO. She is the former CFO of NerdWallet. Vice president of people and culture, Tia Gordon who worked as the director of people at Google; and vice president of customer experience, Ruth Yankoupe, who held the same position at OYO.
Getaround’s revamp came surprising to many, given that, at the same period the company was working its way out of the strains of COVID-19, Hertz, a giant in the car rental business was declaring bankruptcy.
On May 22, Hertz filed for bankruptcy protection, following the combination of nearly $19 billion of debt and some 700,000 idle rental cars brought by the pandemic that forced its business to shut down.
Hertz’ ordeal was a spotlight on the woes of the travel industry in the wake of the pandemic. Airline companies were not spared as many of them took the same route to declare bankruptcy even after governments’ bailouts. Ridesharing companies like Uber, Lyft and DoorDash are still struggling to record revenues even after the lockdowns were lifted, because many riders are still scared of making person-to-person contact with drivers.
With its rental strategy void of person-to-person contact, Getaround fixed the fear friction and grew an alarming customer-base that attracted more investors amidst the health chaos.