Peer-to-peer car sharing platform Car Next Door has completed an oversubscribed Series B funding round with a $5 million capital injection.
[Related: Share a ride with Car Next Door’s Will and Dave: the duo challenging car ownership, Car Next Door seeking to double funding to accelerate roll-out of its sharing platform and Car Next Door secures $2.3m in Series B capital, announces its first crowdfunding campaign]
Existing investors Investible and Caltex co-led the round, which also saw tech entrepreneur Steve Baxter (founder, River City Labs and Shark Tank star) increase his stake in the tech startup. Other investors included Macquarie Group, Hollard Insurance Company, Russian investment firm Larix VC and prominent venture capitalist Roger Allen.
Speaking to Dynamic Business, Car Next Door co-founder and CEO Will Davies said the Series B lineup reflected a strategy to attract investors who’ll contribute mental capital and work with the startup to create mutually-beneficial offerings.
“For instance, Larix boasts expertise in growing two-sided marketplaces as well as a strong interest in transport,” Davies explained. “Meanwhile, Roger Allen is widely regarded as the ‘Godfather of VC’ and he possesses knowledge about how to scale a tech business like ours. In the case of Macquarie Group and Hollard Insurance Company, the former leases billions of dollars’ worth of cars while the latter owns Real insurance… so, there are opportunities for cross promotion with both.”
Davies revealed that while Car Next Door received $8 million worth of offers, he and his co-founder Dave Trumbull (CTO) “cut off” the round at $5 million, which was the amount they had set out to raise for their Series B round. He explained that an excess of offers meant Car Next Door was in a position to reject terms that weren’t in the company’s best interests.
The Series B capital raise marked the first time Car Next Door sought to crowd-source funding from sophisticated investors.
“We’d been wanting to provide opportunities for smaller investors to get involved with Car Next Door but our size had made it was difficult,” he said. “To avoid things becoming too complicated for us, we only have room for 50 investors on our cap table… we would have maxed that out by taking, say, $20,000 investments from people. Crowd-sourced equity funding platform Equitise provided a helpful channel for us to secure small investments. The aim was to raise a minimum of $500,000 from sophisticated investors but we ultimately raised more than $797,000 through the platform.”
Davies described the Equitise campaign as a ‘test run’, adding that Car Next Door is considering a retail crowdfunding round. He explained, “We’d be happy if a thousand users each invested in Car Next Door. It would encourage them to actively engage with the platform, tell others about it and help us make connections.”
Davies has previously stated that Car Next Door’s Series B capital would 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”.
He said Car Next Door, which has 1300 cars and 60,000 borrowers, had experienced ‘five-fold growth’ across all key metrics (i.e. fleet size, users, revenue and bookings) since closing its Series A round in September 2015. Noting that Car Next Door is firmly established in Sydney, Melbourne and Brisbane, with a presence recently established on the Gold Coast, Davies said there were plans to launch into Canberra, Adelaide and Perth within the next six months.