First, there are those who own cars and complain about parking tickets, monthly payments and the wasted time spent circling for a spot every time they go out.
Second, there are those who do not own cars, and lament the indignity of late-night bus rides, lugging grocery bags for blocks and shelling out for pricey cab fares.
Having been a member of the latter group for many years, and a member of the former for many more, I sympathize with the gripes of each. That’s why I was intrigued when a startup called RelayRides contacted me regarding a Series A funding round for a business model built around sharing individually-owned cars in urban neighborhoods.
RelayRides announced this week that it raised its first institutional round from August Capital and Google Ventures. It’s believed to be a few million dollars for the business, which started up two years ago and launched service this summer in its initial market, Cambridge, Mass. This month, the service is rolling out in San Francisco, enabling car owners to rent their vehicles, either by the hour or by the day, to their neighbors.
Founder and CEO Shelby Clark says he got the idea in part from his experience using car-sharing services, such as ZipCar, which operate fleets of cars that people can reserve for errands or longer trips. While he was a big fan of those services, Clark says, he noticed there often wasn’t a car available when and where he wanted it. In addition, the onetime Harvard Business School student says, the overhead costs are high, since the car-sharing service must acquire, track and maintain its cars.
“Car sharing is a great idea,” he says. “But what if we can connect our communities to better leverage the resources we already have?”
By “resources we already have,” Clark is referring to the legions of cars that people already own but often don’t drive much. Through RelayRides, car owners can set their car’s hourly and daily rates and make them available to pre-screened members. Rates, which include gas and insurance, start at $6 per hour and average around $8, with more luxurious models costing a few dollars more. Borrowers get access to the car through a smartcard that interfaces with an access device on the vehicle.
In launching the service, Clark says one of the hardest parts was securing an insurance policy to cover drivers and car owners. The process took over a year, he says. He declined to name the insurer providing the coverage.
As for uptake, in Cambridge, “we have a car that’s less than a five minute walk from virtually everyone,” Clark says. There are currently about 50 cars and about 1000 borrowers registered for the service there, he says.