-
Car-sharing platform Getaround goes public through a merger with InterPrivate II Acquisition Corp. (NYSE: IPVA)
-
Getaround allows car owners to rent cars to customers on a marketplace platform similar to Airbnb
-
Getaround has a solid lead, with 20 times more connected cars than its nearest competitor
-
Superior economy with a 48% “take rate” – well above Airbnb and Turo
-
Getaround has 10 years of experience, raising $500m from VCs and strategic investors
-
IPO edge estimates up to $100 million in revenue in 2023
-
Top 20 cities already have positive Ebitda, transaction proceeds are sufficient to achieve enterprise-level profitability
-
Has integration agreements with Toyota Motor Corp., Tesla Inc. for “Getaround Ready” vehicles
-
Toyota also a financial partner via an investment in Getaround
-
Partnership with Uber Technologies, Inc. to offer cars to drivers in the app
These days, consumers can use sharing platforms for everything from an Irish castle on Airbnb, Inc. to a neighbor’s pool on Swimply. But there’s another industry likely more ripe for disruption with a superior economy to boot: car-sharing.
Investors keen to follow the trend should consider leading car-sharing platform Getaround, which is going public through a merger with InterPrivate II Acquisition Corp. (NYSE: IPVA). The company, founded shortly after Airbnb in 2011, offers a similar solution by allowing car owners to rent to other drivers when they don’t need cars themselves.
There are reasons to say that Getaround’s business is superior to other sharing platforms in several respects. First, the technology is fully digital after a one-hour hardware installation. Once the Getaround system is in place, an owner can let a renter access a vehicle simply using a smartphone – which essentially acts as a car key.
Once the tenant has gained access, the whole process is streamlined and tracked through the Getaround Cloud. The system includes everything from monitoring fuel consumption to charging users for tolls they might pass on a highway. It’s a different model from, say, Turo, which also offers short-term rentals, but has more costs and friction associated with human interaction (to deliver and reserve vehicles, for example).
Such simplicity strongly appeals to renters who want a quick and seamless experience when booking, driving and returning a vehicle. Customers who spend less time with the hassle of booking are likely to return to Getaround more often and pay a premium for ease and convenience.
Technology also helps to optimize the car owner’s experience. Getaround analyzes data to determine optimal price levels based on local supply and demand, as well as situation-specific risks. It also has a robust “know your customer” framework to verify identities, block abusers, and detect fraud or abusive behavior.
Further streamlining the experience are key partnerships that Getaround has established with major players. It has partnered with Toyota and Uber to build “Getaround Ready” cars that come equipped with the Getaround system right off the assembly line, similar to vehicles that allow drivers to instantly subscribe to Sirius XM. Such a placement will create a serious wedge around the company against all challengers.
Additionally, Getaround has entered into an agreement with Uber to connect the two apps and seamlessly offer drivers short-term rentals. It’s a nifty solution for part-timers who can’t or don’t want to own their own vehicle, but want to drive to earn extra money during certain time slots.
Big companies are noticing the car-sharing boom and talking about it. The number of mentions of “carpooling” in public documents has exploded in recent years, according to data from Sentieoan AI-based research platform (see table below).
Above all, Getaround has assembled a team of so-called powerhosts who invest in car fleets (large and small) to create their own small businesses. This is much more likely to happen with cars than with real estate due to the lower cost of buying a car.
These powerhosts accounted for 71% of gross booking value between 2020 and 2021. And it’s no wonder so many entrepreneurs have stuck with Getaround: the average car generated over $10,000 in 2021, enough to overcome most of the cost of ownership and generate a profit.
Getaround can be successful in a range of geographies with different population densities. In a place like New York, Getaround can focus on carpooling and short-term rentals for the many residents who don’t own a car. Just as easily, Getaround can thrive in Atlanta, where most people own cars, but there’s demand from people visiting on weekends or on business trips.
It is also worth noting that Getaround car owners need very little infrastructure to start operating. The business can accommodate most types of parking, including valets and garages. But around 60% of its vehicles are simply parked on the street where customers pick them up and return them – again without any human contact.
Getaround has evolved at breakneck speed since its founding by CEO Sam Zaid in 2011, raising $500 million from venture capital and strategic investors. Over that time, it has become one of the world’s two largest car-sharing platforms, operating in 950 cities in 8 countries, with 1.6 million unique customers renting a current fleet of 66,000 cars from hosts. .
Founder and CEO of Getaround, Sam Zaid
The company benefits both from a large amount of recurring business – 84% of ride revenue comes from loyal customers – but also from strong demand from new users. Each cohort in recent years spent significantly more than the comparable class of users in the previous year.
All of this translates into an impressive financial profile. One metric investors should consider is Getaround’s so-called take rate which reflects the percentage that each dollar booked it keeps for itself. Getaround’s participation rate is 48%, compared to 37% at Turo, 18% for Uber and only 13% for Airbnb.
Digging deeper into the numbers, Getaround is clearly on the path to profitability. In 2021, the company averaged positive EBITDA across its top 20 markets. And the investments are paying off: the company generates a return on advertising spend multiplied by 13 in all of its activity. The IPO transaction is expected to generate sufficient proceeds for the Getaround executive’s plan and achieve positive Ebitda at the company level.
Turning to revenue, Getaround recorded average annual revenue growth of 25% between 2019 and 2021, despite Covid-related challenges. Conservatively assuming a similar pace through 2023, the company will hit nearly $100 million in annual revenue next year.
In the years to come, the potential for growth is even greater, especially as Getaround forges more and more partnerships with manufacturers of “Getaround Ready” vehicles and as agreements such as the Uber arrangement begin to carry their fruits.
It’s clear that companies like Airbnb and Lyft are helping consumers live the way they want. But Getaround’s model looks even more promising, given its superior profitability and lead over its rivals. Investors getting started now should enjoy a road to strong returns.
Contact:
www.ipo-edge.com
Twitter: @IPOEdge
Instagram: @IPOEdge
Comments are closed.