Peer-to-peer car sharing platform Car Next Door has completed the first stage of its Series B capital raise, securing $2.3 million from new and existing investors, and kicked off stage two with the launch of a crowdfunding campaign through Equitise.
Founded in in 2012 by CEO Will Davies and CTO Dave Trumbull, the startup enables car owners to rent out their vehicles when they are not in use. Between September 2015 and October 2017, the company’s fleet grew from 321 to 1258 cars and the size of its borrower community increased by 509.5% to 49,012. Meanwhile, monthly bookings for October 2017 stood at 6365, a 310% increase on September 2015.
Davies told Dynamic Business that he and his co-founder Dave Trumbull considered a number of crowdfunding platforms but selected Equitise due to their “impressive track record of raising funds” as well as their “large database of registered users and smart fee structure”.
“We’re aiming to raise between $0.5m and $1.5m through Equitise while raising awareness of Car Next Door within the investor community,” he said. “This is our first experience of crowdfunding, so we’re looking forward to getting familiar with the process before we look at retail crowdfunding down the road.”
Equitise CEO Chris Gilbert said the crowdfunding platform employs automation to make it ‘more efficient’ for startups like Car Next Door to on-board multiple high net worth individuals making smaller investments. He explained, “Due to the amount of paperwork involved, the process of transacting lots of smaller share parcels would be too time-consuming if it were undertaken manually. Our platform automates the process of getting smaller investors on board.”
In addition to partnering with Equitise, Davies said Car Next Door, which now operates across Sydney, Melbourne, Brisbane and Newcastle, will secure capital from other sources, with the goal being to raise $5 million across both stages of the Series B round.
“Although we’ll continue to raise capital via traditional means, crowdfunding really makes sense for a peer-to-peer platform like ours,” he explained. “We wanted to open up the opportunity to own a part of the business to more people in our community. We have a lot of really engaged members who want to get involved in the growth of Car Next Door.
“While only those who are sophisticated investors can get involved at the moment, the government is making changes that should allow us to open up equity to all of our members in 2018 (not just those deemed “sophisticated investors”). Crowdfunding is a great way to encourage greater participation by our community whose passion and participation really drives our business.”
Davies said the Series B capital will be funnelled into customer acquisition and the “creation of a big, active network” as well as platform enhancements, including “new tech solutions that make it even easier to turn regular cars into share cars”.
The first stage of Car Next Door’s Series B was co-led by existing investors Investible and Caltex, with the latter contributing $2.7 million to the company’s Series A round. To date, Car Next Door has raised $7.6 million in Seed, Series A and Series B funding. Davies said he and Trumbull have sought out investors who contribute mental capital.
“We’ve got an amazing group of investors, many of whom actively advise and Mentor us along as we grow,” he said. “Trevor Folsom (who along with Creel Price founded Investible) is Car Next Door’s chairman as well s one of our biggest supporters and a great mentor. Trevor makes up the board with Mike Rosenbaum (Founder of DealsDirect.com and Spacer.com), Wayne Baskin (Deputy CEO and CTO of Booktopia), Simon Hepworth (CFO of Caltex) and Berge Der Sarkissian (founder of Leveraged Equities).
“We’ve also benefitted enormously from Steve Baxter’s astute mentorship and his help with spreading the word about Car Next Door among the start-up community and connecting us with other entrepreneurs to share experiences and learnings. Meanwhile, Impact Investment has helped connect us with other Australian businesses that are working to have a positive impact in the world.”
Davies said Car Next Door will establish a presence on the Gold Coast this month, before launching into Canberra ‘early next year’.
“We’re aiming to reach Perth and Adelaide soon, too,” he added. “By the end of 2018 we’re planning to have 120,000 borrowers using the platform with tens of thousands more people able to stop wasting money on a car they hardly ever drive and start using their neighbours’ cars, or earning money with their car, instead.”
Related: Car Next Door seeking to double funding to accelerate roll-out of its sharing platform and Share a ride with Car Next Door’s Will and Dave: the duo challenging car ownership.