Turo IPO filing signals growth in luxury carsharing
Turn, a peer-to-peer luxury car-sharing startup, has announced plans to go public. The San Francisco-based startup has been hailed as “the Airbnb of car sharing.”
Turo has grown rapidly since its inception in 2010. Importantly, its business model has proven resilient to changes in economic and travel trends. The platform offers cars that meet a variety of needs, including convertibles for beach getaways, minivans for family road trips, and ultra-luxury cars that make an impression at high-end events. range.
Business has accelerated during the pandemic as consumers are drawn to the convenience of the peer-to-peer car-sharing model. Supply chain issues during the pandemic have driven up rental car prices. Turo has benefited from rising car rental prices.
Like other companies in sharing economy, Turo profits by taking a percentage from both the host and the client. Turo’s revenue has more than tripled since 2020, reaching $330 million in the first nine months of 2021. However, as a growing startup with lots of expenses, Turo has yet to post a profit.
In the IPO registration statement Turo filed with the SEC, it noted, “Our platform avoids the capital intensity and asset-based limitations of the car rental and car-sharing industries. fleet, while providing low-cost access to individual car owners. to earn extra income by sharing their vehicles through our marketplace.
Turo Business Pitch
Turo has become the largest car-sharing marketplace in the world. Her trusted hosts share cars with guests in the US, Canada and the UK. As of September 30, 2021, Turo has over 85,000 active hosts and 1.3 million active guests. The startup also offers a selection of over 160,000 active vehicle listings.
Turo believes its private vehicle network provides customers with greater convenience than traditional car rental companies. Hosts can dynamically adjust prices to meet anticipated guest demand. The platform uses proprietary software called Turo Risk Score to detect and prevent fraud.
The current car rental industry business model has several inefficiencies. Turo believes it offers solutions to many of the location and timing constraints that plague major car rental companies. For example, traditional car rental company pickup locations are not always convenient and inventory can be unpredictable.
Turo challenges the entrenched notion that car ownership is a key economic benefit. In its registration statement on Form S-1 filed with the SEC for an IPO, Turo noted that the cars were depreciating rapidly. Owning a car also comes with many additional costs such as car insurance, license registration and taxes. If the car is rarely driven, as is often the case with luxury or specialty cars, the costs of owning a car make it even less economically efficient.
In 2009, Shelby Clark looked for a rental car to visit her family during the holidays. Although he lives in Boston, the closest option he could find was over two miles away. Mr. Clark cycled through the snow to the rental car pick-up location. Passing by parked cars on the streets of Boston, he had a light bulb moment.
Turo had a rough start in its early years. Insurance was one of his main obstacles. “It took a year and a half to figure out the conundrum of insurance,” Clark said. “We spent several months trying to convince them that a peer-to-peer model could be very similar to a standard model. And no one would touch it.
Legal issues for Turo
As the company grew in size and influence, it also attracted lawsuits. Some of its hosts are under criminal investigation for using Turo to facilitate human trafficking. Turo can be held responsible for the criminal activities of its hosts. U.S. Customs and Border Protection notes that peer-to-peer car sharing has become increasingly popular near the U.S.-Mexico border.
Turo is also facing legal challenges from airport authorities. The traditional car rental industry has not reacted warmly to Turo’s growth. Some Turo hosts build their businesses at airports, key profit points for large car rental companies.
Players in the traditional car rental industry say this is unfair competition. They are trying to force Turo to get rental car permits for hosts who operate near airports. Most of these airport-related lawsuits, including one filed by the City of Los Angeles, have yet to be settled.
Raise capital for future expansion
Some of Turo’s biggest investors include August Capital and IAC/InterActiveCorp., a holding company headed by Barry Diller. Turo hopes to raise additional capital through an IPO. The funds would be used to expand its business into new geographic markets and increase its operational capabilities. The startup will list its shares on the New York Stock Exchange under the symbol “TURO”.