Zipcar IPO: Car-Sharing Heavyweight Files to Raise $75M

Zipcar, a decade old startup with the country’s largest car sharing network, has filed with regulators this morning to raise up to $75 million in an initial public offering. With a fleet of 7,000 vehicles, more than 400,000 members (who can rent the car by the hour or day), Zipcar relies on the web, software, data centers, GPS, mobile networks and other communication tools to provide mobility as a service. In the 12 months ending March 31 of this year, the company processed more than 2.6 million reservations.

Today’s filing comes on the heels of Zipcar arranging to borrow $70 million under a one-year credit facility for the purchase of new cars for its U.S. fleet (through Zipcar Vehicle Financing, a wholly owned subsidiary). The IPO filing also comes about six weeks after Zipcar acquired its largest competitor in the UK (a car sharing provider called Streetcar), and more than two years after Zipcar absorbed its largest U.S. competitor: Seattle-based Flexcar, owned by AOL Co-founder Steve Case.

Zipcar (one of our 10 Greentech IPO Picks) has discussed the goal of going public since early 2008, and comments from CEO Scott Griffith last summer hinted at Zipcar hoping for an IPO sometime in 2010. The company told us in April 2009 that it expected to “cross over into profitability this year.” According to today’s filing, however, Zipcar has seen net losses each year since its inception and it expects to lose money again in 2010 (we’ll report more details from the S-1 later today).

Anticipating significant expenses to arise as part of its expansion effort (Zipcar currently operates in only 13 of more than 100 global metro areas and university campuses where it hopes to set up car sharing), the company says it does not know if its losses will continue in “2011 and beyond.” Last year, Zipcar says its revenues reached $131.2 million, up from just $13.7 million in 2005.

Zipcar’s plans for the proceeds from the offering include, among other things, repaying more than $40 million in debt, developing new services, expanding its fleet and paying some $5 million to shareholders in the recently acquired Streetcar.

Zipcar developed its fleet technology with a plan to scale it. The company’s vehicles carry some essential hardware — notably a “black box” device (a custom circuit board, processor and modem) fitted to a vehicle wind shield that allows users to unlock the car they’ve reserved. The device receives data over AT&T’s (s ATT) wireless network and when a user reserves a car (online or over the phone), it authorizes their card for a particular vehicle. Those devices also allow Zipcar — and now fleet managers, through Zipcar’s new FastFleet program — to remotely monitor vehicles.

Zipcar stands as the heavyweight in a growing market. According to forecasts from research firm Frost & Sullivan, the number of drivers using car-sharing networks increased 117 percent between 2007 and 2009 in North America. Within five years, the firm expects to see 4.4 million people in North America and 5.5 million people in Europe (where Zipcar hopes to expand  its presence beyond London) sign up for car-sharing programs, more than tripling membership from 2009.

The “green” aspect of a car sharing service like Zipcar stems from their potential to serve as an early testing ground for cleaner vehicles, and their capacity to help reduce vehicle ownership. “Lots of people sell or don’t buy cars as a result of our business,” Griffith said in a panel earlier this year. “Or we become their second car, their fractional second car,” since users only pay to “own” a Zipcar vehicle for a fraction of the time they’d pay to buy or lease a personal vehicle. In addition, Frost & Sullivan anticipates plug-in vehicles will make up one in every five new vehicle purchases for car-share fleets by 2016.

Photo courtesy of Zipcar

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