Aussie car-sharing startup Car Next Door has been acquired by global transport behemoth Uber, in a deal that has likely left investors well in-pocket.
But in the decade since the startup launched, and seven years after a gutsy appearance on Channel 10’s Shark Tank, much has changed for the business, and for the sector it operates in.
Speaking to SmartCompany, Car Next Door co-founder and chief executive Will Davies says the acquisition is both the “end of an era and the start of a whole new challenge and opportunity”.
Building and growing the business from scratch has been a huge effort for the founders, he adds. But the scope of Uber’s customer-base in Australia and around the world means this is only the beginning for the brand.
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“I’m really pumped about being able to be involved in taking it from where it is at the moment — which, even though it feels quite big to us, is probably potentially pretty embryonic compared to where it could get,” Davies adds.
Terms of the acquisition have not been disclosed. While Davies doesn’t budge on this, he does say the business was cash-flow neutral, and wasn’t in a position where it needed to sell.
It was a choice the founders were happy with, and they were supported by 100% of the investors, who were “happy with the structure and with how it all turned out”, Davies hints.
“People did well out of it.”
A gutsy Shark Tank pitch
When Car Next Door was founded in 2012, Davies had already been working on the concept for a year or more. According to data from Pitchbook, the startup secured its first $650,000 in early-stage venture capital in 2013.
In 2016, Davies and co-founder David Trumbell appeared on Shark Tank Australia, seeking a $300,000 investment for a 4% stake in the business.
The offer matched what had been offered to other early-stage investors, and so — somewhat controversially for the show — there was little room for negotiation.
At the time, the startup had 350 cars and about 9000 borrowers on its platform, and was generating more than $500,000 per year in gross profit.
The founders needed more cash to build out their network across Australian cities, Davies said in the pitch.
And while some of the sharks expressed concern over competitors, he maintained that with Car Next Door‘s technology and early traction, “we’re going to be able to push forward a lot faster than everyone else”.
Four of the five sharks were not convinced, or not tempted enough by the 4% stake up for grabs.
That prompted Davies to do something else unexpected, offering the sharks extra equity in the business in exchange for 30 hours of mentoring and support efforts, over three years.
“It takes into account that you guys are very successful, busy, and you want your time to matter,” he said.
That wasn’t enough to sway the other sharks, but despite admitting he “wasn’t expecting to like this”, Steve Baxter was won over.
The founders stuck to their guns in refusing to negotiate the terms, and ultimately Baxter met them there.
Acceleration out of the tank
In 2018, Car Next Door came in fifth place on SmartCompany’s Smart50 List, having seen revenue growth of 384% over the preceding three years. At that time, the startup was generating annual revenues of $3.33 million.
Davies doesn’t share Car Next Door’s most recent revenue figures. However he does say the platform has facilitated close to 1 million trips, to date, with about 5000 cars and 137,000 active borrowers on the platform.
Since the Shark Tank appearance, attitudes towards car ownership and mobility in general are shifting, he notes. Things like Uber and improved transport apps have made it easier than ever to get by without owning your own vehicle, particularly in the city.
At the same time, people are much more used to doing everything online and on mobile.
In 2016, the vast majority of Car Next Door’s bookings were made on desktop computers, for example. Now 80% come through the app.
“It’s a dramatically different world we live in now,” Davies says.