Zipcar Inc., the Cambridge-based car-sharing service that rents cars by the hour, said it is investing in a $13.7 million Series A round of funding for a California company that targets so-called “peer-to-peer” car-sharing services to college students.
The California company is Palo Alto-based Wheelz Inc., which has devised a car sharing platform designed to connect students who own cars with students who want to pay to borrow them. Under the Wheelz model, car owners can earn money from their cars by providing access to them for “borrowers,” who then get use of the vehicle for such occasions as running errands, going on dates, or making weekend trips, Zipcar said in a press release.
College campuses are collectively a big market for Zipcar. Its car-sharing services are available at about 250 campuses. High density urban neighborhoods have also been fertile ground for Zipcar.
In a statement, Zipcar chairman and chief executive Scott Griffith explained the rationale for Zipcar’s investment in Wheelz.
“Based on our analysis and primary research, we believe P2P (peer-to-peer) could expand the total addressable market for car sharing,” Griffith said. “We chose to make this investment because we believe that Wheelz has the right leadership, technology, and business model to succeed in the emerging P2P space.”
This is the first time that Zipcar has made an investment in a peer-to-peer car-sharing company, a Zipcar spokesman said.
The size of Zipcar’s investment in Wheelz is not being disclosed. In its press release, Zipcar describes itself as the lead investor of the Series A round.
Also participating in the round is Fontinalis Partners, a Detroit-based investment firm focused on transportation technology. Bill Ford, executive chairman of Ford Motor Co., is a founding partner of Fontinalis.
Zipcar became a publicly traded company last April. Earlier this month, Zipcar shares fell after the company forecast a first-quarter loss because of sluggish growth in the UK.
But even though financial analysts expected the company to break even for the last three months of 2011, Zipcar instead posted its second consecutive quarterly profit: $3.9 million, or 9 cents per share, up from a $1.1 million loss a year earlier. Meanwhile, revenue rose 21 percent to $62.9 million.