will pay $250 million for a stake in Turo Inc. in a deal that values the burgeoning peer-to-peer car-sharing company at more than $1 billion.
The cash from Barry Diller’s IAC will be used to fuel Turo’s growth as the race to capture market share in the still-nascent vehicle-sharing industry heats up, IAC officials said in interviews this week. The deal will make IAC Turo’s largest shareholder.
San Francisco-based Turo generated roughly $250 million in revenue in 2018, according to a person familiar with the company’s finances.
Turo, which currently has 10 million members and nearly 400,000 listed vehicles, allows people to rent out their cars online or through its app. Founded in 2010, the company is now in 49 states and 5,500 cities except New York, where such rentals can’t be insured.
Turo has already raised $470 million, including from multiple venture firms. Its main competitor, Getaround Inc., has raised roughly $410 million, which includes investments from the SoftBank Vision Fund and
Car-sharing is behind ride-hailing and home-sharing in terms of development, but the success companies including
and Airbnb Inc. have enjoyed show the potential promise of companies like Turo. Such businesses benefit from what is called the network effect: The more people that use them, the more robust the service.
“The thing that appeals to IAC about marketplaces is that the bigger you are the better product you can deliver,” Joey Levin, IAC’s chief executive, said in an interview. He estimates that the car-sharing marketplace could be at least as big as the car-rental business, which generates roughly $60 billion a year in sales.
“The most important thing for Turo and its competitors is awareness—that it’s OK to rent a car from your neighbors,” he said.
IAC is known for making majority investments in companies or buying them outright. It holds majority stakes in the parent companies of online-dating services Match and Tinder, and home-improvement companies HomeAdvisor and Angie’s List. It also owns the Daily Beast, Vimeo and Dotdash, which was formerly known as About.com.
Mr. Levin said the investment in Turo is IAC’s largest minority investment ever “by an order of magnitude.” Mr. Levin, who will join Turo’s board as part of this deal, added that IAC, which has the right to increase its ownership over time, expects to do so even if it comes at a higher price tag.
Mr. Levin said IAC was willing to consider a minority investment because there has been so much value created by companies—and so much money flowing to them—between when they’re proving themselves and when they become multibillion-dollar companies.
Turo could consider an IPO down the road, Mr. Levin said. “I think this is a company that’s capable of being a public company,” he said, but this capital should last them for “a good amount of time.”
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