The largest car sharing company in the U.S., Zipcar, said this morning it has raised $21 million in a Series G (yes, G!) financing round. While that could sound like a good thing, it could also mean that the company’s highly anticipated IPO is on the rocks. That’s usually the case when a company opts for private financing before it prices a planned IPO, though Zipcar hasn’t officially pulled the IPO yet.
Zipcar, which has at least 500,000 members (who can rent the car by the hour or day), filed for a planned IPO in June, which could have raised up to $75 million. That summer S1 came 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), and also came about six weeks after Zipcar acquired its largest competitor in the UK, a car sharing provider called Streetcar.
It’s road to an IPO got bumpy just two months after it first filed to go public. In August, the Office of Fair Trade (OFT) in the UK said it couldn’t be confident the acquisition of Streetcar wouldn’t stifle competition, and it referred the case to the Competition Commission for further review. Then in November, Zipcar said the Competition Commission provisionally cleared the acquisition in the UK.
Zipcar says it will now use these newly raised funds — $20 million from Meritech Capital Partners and $1 million from Pinnacle Ventures — to grow its fleet, expand geographically, and “strengthen its balance sheet.” According to its latest filing, Zipcar generated $79.21 million in revenues for the first six months of 2010, and lost $10.56 million during that time.
If Zipcar does officially pull its IPO, it’s probably because it has yet to turn a profit. The company has lost money every year since its inception in 2000. The company told us way back in April 2009 that it expected to “cross over into profitability” in 2009, but clearly that’s not the case yet, and in fact, its losses almost doubled between 2009 and 2o10.
Zipcar wouldn’t be the only company to pull an IPO in difficult times. This summer, solar company Solyndra also ditched its IPO to raise more private funds. Other greentech companies that pulled back from the brink of IPO include Nobao Renewable Energy, Trony Solar, and Jinko Solar.
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