Wednesday, June 2, 2010

Zipcars files for an IPO

More interesting to see the details of this business, rather than anticipating buying shares.

Short-term car rental firm Zipcars filed an S1 yesterday, as it looks like they will tap the market for a modified IPO - I say modified because like almost every other IPO out there these days, this isn't raising money for pure growth, but rather to pay back other pieces of the capital structure.

A peek at their operating model:

And a discussion of recent trends:

Insiders will continue to own a large piece of the company, while backers like Benchmark will likely sell off a decent chunk of their stake:

And the risks.  Among the most important is the entry of the North American rental giants into Zipcars' field.  
The market for car sharing services is becoming increasingly competitive, and if we fail to compete effectively our business will suffer.
We expect that the competitive environment for our car sharing service will become more intense as additional companies enter our North American markets. Currently, our primary competitors in North America are traditional rental car companies that have recently begun operating car sharing services, which generally have greater name recognition among our target members and greater financial, technical and marketing resources. Secondary competitors include for-profit and not-for-profit companies who provide car sharing services in specific neighborhoods, communities or cities. These secondary competitors may increase the number of vehicles in their fleets or enhance the vehicle offerings in their existing fleets to be more competitive, and additional competitors may enter our markets in North America. Some of our competitors may respond more quickly to new or emerging technologies and changes in driver preferences or requirements that may render our services less desirable or obsolete. These competitors could introduce new solutions with competitive price and convenience characteristics or undertake more aggressive marketing campaigns than ours. We believe that price is one of the primary competitive factors in our market and pricing in our markets is very transparent. Our competitors, some of whom may have access to substantial capital, may seek to compete aggressively on the basis of pricing. To the extent that we decrease our pricing as a result of downward pricing by our competitors and are not able to reduce our operating costs, it could have a material adverse impact on our results of operations, as we may lose members and experience a decrease in Zipcar reservations.

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