Cambridge, Mass.-based Zipcar, which provides hourly and daily rentals to 673,000 members in urban areas throughout the U.S., Canada and the U.K., invested in Wheelz along with Detroit-based Fontinalis Partners LLC, an investment firm founded by Ford Motor Co. executive chairman Bill Ford and former Ford executive Mark Schulz but not affiliated with the automaker.
While Zipcar owns the vehicles it rents, Palo Alto, Calif.-based Wheelz, which was founded last year, focuses on allowing individual car owners, particularly college students, to rent their vehicles to other students. Car owners install hardware in their vehicles that make them accessible to renters who have made a reservation online or via their smartphone.
Zipcar was founded in 2000 and secured more than $59 million in venture financing before raising $173.4 million in a highly touted initial public offering last April. However, the company's shares have trended down in the months since their debut at $20, trading at $13.22 on Wednesday afternoon.
Investors have worried that Zipcar could be squeezed between larger auto rental firms like Hertz Global Holdings Inc., which is building its own Zipcar rival, and peer-to-peer upstarts. In addition to Wheelz, RelayRides has raised $13 million from General Motors Co., Google Ventures and others, while Getaround Inc. last September announced $3.4 million in seed funding from CrunchFund, Redpoint Ventures and individuals.
With the investment Zipcar is forging a partnership with a company that it says it views as a leader in peer-to-peer rentals.
"We believe [peer-to-peer] could expand the total addressable market for car sharing," Zipcar chairman and CEO Scott Griffith said in a statement. "This investment is our first step in the direction of potentially offering a broader array of mobility services."
Wheelz founder and CEO Jeff Miller said Zipcar "knows and understands the business complexities of car sharing better than anyone on the planet," saying his company "will benefit tremendously from this expertise." Griffith and Fontinalis' Schulz will join the Wheelz board along with former Ernst & Young LLP vice chairman Jim Freer.