Tur0, a luxury peer-to-peer car sharing startup, announced its intentions to go public. The San Francisco-based startup has been hailed as the “Airbnb of car sharing.”
Turo has grown rapidly since its 2010 inception. Importantly, its business model has proven resilient through shifts in economic and travel trends. The platform offers cars that serve a variety of needs, including convertibles for beach getaways, minivans for family-oriented travel, and ultra-luxury cars that make an impression at upscale events.
Business accelerated during the pandemic as consumers were attracted to the convenience of the peer-to-peer car sharing model. Supply chain issues during the pandemic caused rental car prices to surge. Turo benefitted from the uptick in car rental prices.
Like other companies in the sharing economy, Turo profits by taking a percentage from both the host and the customer. Turo’s revenue has more than tripled since 2020, reaching $330 million in the first nine months of 2021. However, as a growing startup with many expenses, Turo has yet to post a profit.
In the IPO registration statement Turo filed with the SEC, it noted, “Our platform avoids the capital intensity and asset-based limitations of the rental-car and fleet-based car-sharing industries, while providing low-cost access for individual car owners to earn extra income by sharing their vehicles through our marketplace.”
Turo Business Pitch
Turo has grown into the world’s largest car sharing marketplace. Its trusted hosts share cars with guests in the United States, Canada, and the United Kingdom. As of September 30, 2021, Turo had more than 85,000 active hosts and 1.3 million active guests. The startup also boasts a selection of more than 160,000 active vehicle listings.
Turo believes its network of privately owned vehicles offers customers greater convenience than traditional car rental companies. Hosts can dynamically adjust pricing to meet anticipated customer demand. The platform uses proprietary software called Turo Risk Score to detect and prevent fraud.
The existing car rental industry business model has several inefficiencies. Turo believes it offers solutions to many of the location and timing constraints that impact major car rental companies. For example, traditional car rental company pickup locations are not always convenient, and inventory can be unpredictable.
Turo challenges the ingrained notion that car ownership is a key economic advantage. In its Form S-1 registration statement filed with the SEC in preparation for an IPO, Turo noted that cars rapidly depreciate. Car ownership also comes with numerous supplemental costs such as car insurance, license registration, and taxes. If the car is rarely driven, as is often the case with luxury or specialty cars, car ownership costs make it even less economically efficient.
In 2009, Shelby Clark searched for a rental car to visit his family during a holiday. Despite living in Boston, the closest option he could find was over 2 miles away. Mr. Clark biked through the snow to the rental car pickup location. As he passed parked cars on the streets of Boston, he had a lightbulb moment.
Turo had a rough start in its early years. One of its main hurdles was insurance. “It took a year and a half to figure out the insurance conundrum,” Mr. Clark stated. “We spent many months trying to convince them that a peer-to-peer model could be very similar to a standard model. And nobody would touch it.”
Legal Issues for Turo
As the company has grown in size and influence, it has also attracted lawsuits. Some of its hosts are under criminal investigation for using Turo to facilitate human trafficking. Turo may face liability for criminal activities of its hosts. U.S. Customs and Border Protection notes that peer-to-peer car sharing has become increasingly popular near United States/Mexico border.
Turo also faces legal challenges from airport authorities. The traditional rental car industry has not responded warmly to Turo’s growth. Some Turo hosts are building their businesses at airports, key profit points for major rental car companies.
Players in the traditional rental car industry claim this is unfair competition. They trying to force Turo to obtain rental car permits for hosts who operate near airports. Most of these airport-related lawsuits, including one brought by the City of Los Angeles, have yet to be settled.
Raising Capital for Future Expansion
Some of Turo’s largest investors include August Capital and IAC/InterActiveCorp., a holding company led by Barry Diller. Turo hopes to raise additional capital through an IPO. Funds would be used to expand its business to new geographic markets and increase its operational capabilities. The startup will list its stock on the New York Stock Exchange under the ticker symbol “TURO.”