The IPO of 11-year-old VC-backed carsharing service Zipcar Inc. (Nasdaq: ZIP) took off like a rocket today, rising more than 60% from its $18 a share offering price.
At one point today, Zipcar stock was speeding along at $31.50 a share. Reuters has more here.
And that’s tremendous news for rival carsharing services, says Shelby Clark, CEO of San Francisco-based startup RelayRides, which has raised more than $5 million from Google Ventures and August Capital in Series A financing.
“Wow! This is incredible. Carsharing has been a niche service for the last several years, but Zipcar is paving the way for more growth in the industry,” Clark told me this morning. “The IPO shows that carsharing is here to stay.”
It also could mean more startups could enter the fray. In addition to RelayRides, a few other startups have raised funding from several VC firms to gas up operations within the last year, which could make 2011 the year that the neighbor-to-neighbor car sharing sector pulls out of the garage.
For example, there’s San Francisco-based Spride, which was co-founded by Sunil Paul and Nitesh Mehta; San Francisco Bay Area-based Getaround, which is in Beta testing; and London-based WhipCar and DriveMyCar in Australia are also matching car owners and their idle vehicles with people who need to borrow a set of wheels.
A Frost & Sullivan study supports the notion that startups could be entering the market, predicting that car sharing will become a $6 billion industry worldwide by 2016, half of it generated by U.S.-based companies. For more about carsharing and the interest of VCs, VCJ subscribers can read “Baby, You Can Drive My Car” from the February 2011 issue, as well as this story about how parking is also a growth area for investors.
My colleague Luisa Beltran last month wrote about the impending IPO of Zipcar, which has raised about $60 million from Benchmark Capital, Globespan Capital Partners, Greylock Partners, Meritech Capital Partners and Pinnacle Ventures. Revolution Living, the fund of AOL’s Steve Case, owns about 6.9 million shares, or 21.45 percent.
But in reading about Zipcar and how it says it wants to raise about $175 million to expand its fleet and bring in more users, I can’t help but think of Webvan, the online grocer that went bankrupt a decade ago after it raised a ton of cash from Benchmark Capital, Sequoia Capital and others and had visions of national expansion.
But Clark at RelayRides says carsharing is no Webvan.
“Zipcar’s IPO demonstrates that carsharing is a great business model,” Clark says. “Plus, we learned from Webvan that it’s best to refine the model before you grow, which is what we’re doing at RelayRides.”