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How P2P car sharing could impact Zipcar IPO

Its CEO received an accolade last week. Yet, with 7,000 vehicles and more than 400,000 members, car sharing service Zipcar has struggled to reach profitability.

A slump in average revenue per member over the last year and mounting fleet costs spelled a net loss for Zipcar of $4.67 million in 2009. And according to recent company filings, it’s now losing $4M-$5M a quarter with no guarantee of achieving profitability in 2010 or even 2011 … a familiar story from another large recent clean transportation IPO: Tesla.

Now, a handful of so-called peer-to-peer (P2P) car-sharing startups think they have a solution that could let them become profitable faster, while bringing car sharing to more markets and more potential users. Are they friend or foe to car sharing companies like Zipcar?

P2P models
While “traditional” car-sharing companies such as Zipcar acquire a fleet of vehicles that they then distribute, maintain, fuel, insure, and rent to drivers, P2P car-share companies like Whipcar (UK), RelayRides (Boston) and Spride (San Francisco) skip the ownership step. Instead, they aim to manage the relationship between car owners and drivers, much in the way that vacation rental services like VRBO connect vacationers with home and apartment owners.

The model isn’t just about cutting operating costs, though. P2P car sharing aims to capture two segments of the market left out of traditional car sharing:

  • Commuters who use a vehicle to get to and from work; whose vehicles sit in an office parking lot all day and in the garage all weekend, and
  • Drivers in less-dense areas who haven’t had access to car-sharing services at all

Little innovation needed
The ecosystem surrounding P2P car sharing is nearly identical to that for fleet-based car sharing, and relatively mature. The software and hardware components are largely in place—system operators need only make tweaks to off-the-shelf products from manufacturers and service providers. From in-car devices that operate vehicle permissions over cell networks to the data pricing plans carriers charge fleet operators to the online reservation systems for users, most of the plumbing exists.

An exception, however, is insurance. While homeowners can purchase insurance products that allow them to maintain coverage on a personal property when it is rented out to a vacationer, car owners can not. Lloyd’s of London currently offers car sharing insurance to WhipCar and RelayRides where they operate, but many states allow insurers to invalidate personal auto insurance if the vehicle is used for commercial purposes (such as a car sharing program).

How P2P companies could benefit Zipcar
The better known fleet-owning car share companies like Zipcar could become formidable allies and exit partners for the smaller P2P startups. As one CEO pointed out to us recently, the market for P2P car sharing has a strong bias toward a single, trusted brand. Cars are costly personal investments; the company that is able to garner users’ trust will be well positioned to capture a sizeable share of the market. Startups like RelayRides and Spride hope to capitalize on this kind of first-mover advantage. On the other hand, Zipcar already has a known brand.

In many ways, P2P sharing is a natural extension of traditional car sharing services, as it could allow them to offer their service in less dense areas than the urban cores and college campuses they currently serve. Unused vehicles are a financial albatross for car-sharing companies, making vehicle utilization rates a limiting factor for expansion; leveraging privately owned vehicles in markets with low utilization rates could be one solution. Similarly, privately-owned commuter vehicles could be used to expand the fleet during business hours in commercial districts, or on the weekends in residential neighborhoods.

P2P could also help speed returns on car sharing companies’ non-vehicle investments. Zipcar’s IPO filing revealed fleet operations costs of $93.36 million in 2009—nearly 70% of its total operating costs. Expanding revenue-generating services without a proportional increase in vehicle costs could be an attractive option. (Similarly, Zipcar recently began offering its reservation software to fleet operators as a way to boost revenue without accruing additional vehicle costs.) While Zipcar hasn’t publicly expressed interest in offering a P2P component to its service, others have. CityCar Share in the San Francisco Bay Area, for example, is partnering with Spride in an effort to bring P2P car-sharing to its members.

WhipCar RelayRides Spride
Location London Boston San Francisco
Car owners Free to join. Vehicles are screened by VIN for make/model/year and accident history. No safety checks are performed, and WhipCar relies heavily on self-reporting by vehicle owners. Free to join. Vehicles must pass and maintain a current safety screening (within two years from approved mechanic). N/A – service does not currently exist.
Drivers Free to join. Drivers must have a clean driving record in order to book a vehicle. $25 annual membership fee. Drivers must have a clean driving record in order to join the service. N/A — service does not currently exist.
Insurance Included. Commercial insurance provided by Lloyd’s covers drivers. Included. Commercial insurance provided by Lloyd’s covers drivers. Last month, California passed AB 1871, allowing commercial insurance coverage of private vehicles without invalidating private insurance coverage. First bill of its kind in the U.S.
Fuel Not included in rental price. Vehicles must have at least ¼ tank at pickup, and drivers must return cars with same amount of fuel as at pickup. Included in rental price. Fuel cards are included in all vehicles, and gas charges are deducted from owners monthly earnings. N/A
Rental rates Rates set by owner, based on location, make and model, as well as maintenance costs. Rates set by owner, based on location, make and model, as well as fuel and maintenance costs. N/A
Key exchange In person. Drivers and owners meet at a pre-arranged location to exchange keys for pickup and drop-off. Remote: RelayRides installs a digital controller in each vehicle (like that used by Zipcar and other traditional car sharing providers) that authorizes keycard access to vehicles during specified reservation periods. N/A, but likely to use remote system.
Partners N/A N/A City CarShare
Revenue model 15% commission on rentals, plus  users pay a £2.50 booking fee. 15% commission on rentals, plus drivers pay an annual $25 membership fee, waived during pilot. N/A

Source: Kachan & Co.

For more analysis of the expected impacts of P2P car sharing, or of other developments in the wider clean transportation sector, contact us.

(This article was originally published here. Reposted by permission.)

A former managing director of the Cleantech Group, Dallas Kachan is now managing partner of Kachan & Co., a cleantech research and advisory firm that does business worldwide from San Francisco, Toronto and Vancouver. Its staff have been covering, publishing about and helping propel clean technology since 2006. Kachan & Co. offers cleantech research reports, consulting and other services that help accelerate its clients’ success in clean technology. Details at www.kachan.com.

Clean Technology Venture Investment Increases 65 Percent in First Half of 2010

Matches 2008 Investment Record

The Cleantech Group and Deloitte released preliminary 2Q 2010 results for clean technology venture investments in North America, Europe, China and India, totaling $2.02 billion across 140 companies.

Cleantech venture investment was up 43 percent from the same period a year ago. The number of deals recorded in 2Q10 was down from a record high of 192 in 1Q10, but still represents a strong quarter by historic standards. This completes 1H10, up 65 percent on 1H09.

Corporate activity around cleantech innovation has continued to play an important role in maintaining the levels of investment activity. Corporations are becoming key participants in many of the largest venture and growth capital investment rounds. Strong corporate involvement was evident again in the quarter’s top ten deals: Intel Capital, GE Capital, Shell, Votorantim, Alstom, and Cargill Ventures all contributed, the latter two making their first publicly disclosed venture-stage investments in cleantech.

Corporations have multi-faceted roles in cleantech. Any single utility or multi-national could play any or all of the following roles – investor, partner, customer, acquirer, or competitor. As such, their activity levels are a key indicator of the health and growth of the broader market for clean technology products. The strengthening of corporate commitment to renewable energy and broader cleantech are evident in the strong growth of multi-national corporate and U.S. utility investment for the first half of 2010 :

1H10, total announced capacity additions by U.S. utilities increased 197 percent compared to 2H09, from 1,393MW to 4,134MW, primarily driven by wind and solar. Power purchase agreements (PPAs) rose 148 percent in 1H10, compared to 2H09, from 621MW to 1,539MW, likely due to the pressure of meeting Renewable Portfolio Standards in many U.S. states. Corporate investment announcements from the global corporates tracked reached a new high of $5.1 billion in 1H10, a 325 percent increase from the same period last year.

“The significant strengthening of corporate and utility investment into the cleantech sector, relative to 2009, is very encouraging, given the key role they will play in enabling broader adoption of clean technologies at scale,” said Scott Smith, partner, Deloitte & Touche LLP and Deloitte’s clean tech leader in the United States. “Major U.S. utilities are increasing direct investments in wind and solar due to improving cost scenarios, favorable tax credits and incentives, and evolving pressure to meet Renewable Portfolio Standards. Meanwhile, the largest global companies are seeing the business case for operational cleantech integration, leading to record corporate investment. This uptick was driven by companies looking to improve energy efficiency and reduce carbon emissions in order to reduce operational costs, mitigate energy price volatility risk, drive sustainable growth, and comply with existing and pending regulations around carbon and climate change risk disclosure.”

VENTURE INVESTMENT BY TECHNOLOGY SECTOR

The leading sector in the quarter by amount invested was solar ($811 million), followed by biofuels ($302 million) and smart grid ($256 million). Energy efficiency was the most popular sector measured by number of deals, with 31 funding rounds, ahead of solar (26 deals) and biofuels (13 deals). The largest transactions in these sectors were:

SOLAR – $811 million in 26 deals

Solyndra, a California-based thin film company raised $175 million from existing investors instead of following through with its planned IPO. BrightSource Energy, a California-based developer of utility-scale solar thermal power plants, raised $150 million in Series D funding from new investors Alstom and the California State Teachers Retirement System (CalSTRS) as well as existing investors; the deal followed a conditional commitment from the U.S. Department of Energy for $1.37 billion in loan guarantees that was made in February and Amonix, a California-based developer of concentrated photovoltaic (CPV) solar power systems, raised $129.4 million in a Series B round led by Kleiner, Perkins, Caufield & Byers.

BIOFUELS – $302 million in 13 deals

Amyris Biotechnologies, a California-based developer of technology for the production of renewable fuels and chemicals, closed the final tranche of a $61 million Series C round and also raised a further $47.8 million from Temasek Holdings; Virent Energy Systems, a Wisconsin-based developer of a catalytic bio-refinery platform, raised $46 million from Shell and Cargill Ventures; and Kior, a Texas-based developer of a catalytic cracking technology for turning biomass into bio-crude, raised $40 million.

SMART GRID – $256 million in 11 deals

Landis+Gyr, a Switzerland-based smart metering company, raised an additional $165 million from Credit Suisse to add to the $100 million it raised in mid-2009, while OpenPeak, a Florida-based developer of home energy management products, raised $52 million from Intel Capital and existing investors, and GreenWave Reality a Denmark-based developer of home energy management products, raised $11 million from Craton Equity Partners and other undisclosed investors.

ENERGY EFFICIENCY – $147 million in 31 deals

Nualight, an Ireland-based developer of LED illumination products for refrigerated displays in food retail, raised $11.4 million from Climate Change Capital Private Equity, 4th Level Ventures and ESB Novus Modus. This was the largest deal in the energy efficiency category after OpenPeak ($52million, as above).

VENTURE INVESTMENT BY WORLD REGION

North America accounted for 72 percent of the total, while Europe and Israel accounted for 24 percent, India 3 percent, and China for 2 percent.

NORTH AMERICA: North American companies raised USD $1.46 billion, down 11 percent from 1Q10 but up 47 percent from 2Q09. The total of 76 disclosed rounds was high by historic standards, but down by 41 percent from the record 128 in 1Q10. As the most significant region for VC investment, the sector trends broadly match those described globally. The largest deals were for Solyndra ($175 million), a California-based thin film solar company, BrightSource Energy ($150 million), a California-based developer of utility-scale solar thermal power plants, and Amonix ($129.4 million), a California-based developer of concentrated photovoltaic (CPV) solar power systems. California led the way, with $980 million (67 percent total share) in investment, followed by Massachusetts ($124 million, 8 percent).

EUROPE/ISRAEL: European and Israeli companies raised USD $476 million in 54 disclosed rounds, up 48 percent (by amount) from 1Q10 and up 100 percent from 2Q09. The largest deals were for Swiss smart grid company Landis+Gyr ($165 million) and French solar plant developer Fonroche ($66.1 million). The large growth capital deal for Landis+Gyr places Switzerland ($165 million, 1 deal) at the top of the country league table, followed by France ($82 million, 11 deals), and Norway ($59 million, 4 deals). The UK had the most deals (17) with investment totaling $59 million.

CHINA: Chinese companies raised USD $30 million in 5 disclosed rounds. The largest deal was for Prudent Energy, a developer of flow batteries, which raised $10 million from JAFCO Investment Asia, Mitsui Ventures and CEL Partners.
INDIA: Indian companies raised USD $59 million in 4 disclosed rounds. The largest deal was for Krishidhan Seeds, a producer and distributor of hybrid seeds for the farming industry, which raised $30 million from Summit Partners.

GLOBAL M&As AND IPOs

There were 19 clean technology IPOs during the quarter, totaling $2.31 billion, up slightly from 18 IPOs in 4Q09, also totaling $2.31 billion. China accounted for the majority of transactions, with 12 offerings, which raised a combined $1.73 billion (75 percent of the overall total). There were three North American cleantech IPOs in 1Q 2010, which raised a total of $304 million, the lion share netted by the high-profile $226m IPO of Tesla Motors on June 29, 2010.
However, the largest global cleantech IPO recorded during the quarter was Origin Water, a China-based developer of membrane filtration systems for municipal and industrial sewage treatment and recycling, which raised $370 million from an offering on the Shenzhen Stock Exchange. The company’s share price more than doubled during the first day of trading, valuing the company at about $3.3 billion.

Clean technology M&A totaled an estimated 160 transactions in 2Q10, of which totals were disclosed for 45 transactions totaling $6 billion. Two of the most significant deals were in smart grid: Swiss engineering company ABB acquired U.S.-based software maker Ventyx for more than $1 billion to provide it with broader access to the utility enterprise management market; and Maxim Integrated Products acquired U.S.-based smart meter semiconductor company Teridian Semiconductor for about $315 million in cash.

TOP GLOBAL VC INVESTORS

2Q10 Most Active Cleantech Venture Investors (# investments)
Carbon Trust Investment Partners 6 = Helveta, Green Biologics, Intamac Systems, ACAL Energy, Arieso, Concurrent Thinking,
Kleiner Perkins Caufield & Byers 4 = Amonix, Amyris Biotechnologies, Fisker Automotive, EdeniQ
Angeleno Group 3 = Amonix, Coda Automotive, EdeniQ
Draper Fisher Jurvetson 3 = BrightSource Energy, EdeniQ, Scientific Conservation
Khosla Ventures 3 = Coskata, Amyris Biotechnologies, Sakti3

The Cleantech GroupT, providers of leading global market research, events and advisory services for the cleantech industry, along with Deloitte, which provides audit, tax, consulting and financial advisory services to cleantech companies, released these preliminary 2Q 2010 results for clean technology venture investments in North America, Europe, China and India, totaling $2.02 billion across 140 companies.

Investors can watch for the following green stocks coming to market in 2010: CDXS, JKS, DQ, SOLY

Green IPO Watch at Renewableenergystocks.com Reports on Announced IPO’s in Biofuel and Solar

www.RenewableEnergyStocks.com, a leading investor news and research portal for the renewable energy sector within www.Investorideas.com, reports on recent green IPO’s announced in biofuel and solar markets.

Investors can watch for the following green stock listings in 2010: CDXS, JKS, DQ, SOLY.

Codexis, Inc. originally filed for an IPO in 2008 that was later shelved, announced it filed a registration statement for an IPO of up to $100 Million on Dec 28, 2009. The Company applied to list its common stock on The Nasdaq Global Market under the symbol “CDXS”.

Codexis, Inc. is a provider of optimized biocatalysts that make existing industrial processes faster, cleaner and more efficient than current methods and has the potential to make new industrial processes possible at commercial scale. Codexis has commercialized its biocatalysts in the pharmaceutical industry and is developing biocatalysts for use in producing advanced biofuels under a multi-year research and development collaboration. The company is also using its technology platform to pursue biocatalyst-enabled solutions in other bioindustrial markets, including carbon management, water treatment and chemicals.

China based Jinko Solar announced its IPO of up to $100 Million this week, with plans list on the New York Stock Exchange under the symbol JKS.

Jinko Solar, according to the company’s website, www.jinkosolar.com, is a fast-growing solar product manufacturer manufacturing high quality ingot, wafer, solar cell and solar module products all along the photovoltaic industry chain, with a global network spanning across North America, Europe and Asia.

Other solar stocks pending include China based Daqo New Energy Corp, with an announced $108m IPO earlier in January. According to the SEC filing, the company will be trading on the NYSE under trading symbol DQ.

According to the Prospectus: “We are a leading polysilicon manufacturer based in China. We manufacture and sell high-quality polysilicon to photovoltaic product manufacturers, who further process our polysilicon into ingots, wafers, cells and modules for solar power solutions. With an installed annual production capacity of 3,300 metric tonnes, or MT, as of September 30, 2009, we believe we are one of the largest polysilicon manufacturers in China. We plan to increase our installed annual production capacity to 9,300 MT by March 2012. In addition to ramping up our capacity, we have consistently focused on producing high-quality polysilicon in a cost-efficient manner, which we believe has contributed to our market position and will benefit us and our customers.”

Other green stocks pending include US based California solar company Solyndra Inc, announced in December.
The company’s filing and Prospectus are available to investors at Sec.gov under Solyndra Inc. The company has applied to have its common stock approved for listing under the symbol “SOLY.”

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