Every journey tends to have speedbumps, and that appears to be the case when it comes to the efforts to bring more digital commerce – and less formal ownership – to the automotive world.
That’s just a long way of saying this isn’t going to be the best week for employees of Fair, an automotive subscription startup. The company said it plans to get rid of 40 percent of its staff, reports said. It will also be letting go of CFO Tyler Painter, who is the brother of CEO Scott Painter. His interim replacement will be Kirk Shryoc.
The move comes about a month after Fair, which functions via an app, secured a $500 million revolving credit facility led by Mizuho Bank. SoftBank Group Corp. was among several credit providers also participating in the loan, which will be used to unlock new levels of growth for both Fair and its partner Uber by boosting the supply of rideshare vehicles for Uber drivers.
Analysts are framing this issue as Fair’s response to a spate of venture-backed startups like Uber and WeWork, companies that have struggled to find profitability despite large valuations. Cutting back on staff is reportedly an effort to avoid a similar fate.
“As Fair has grown, the skillsets needed to drive the business forward change,” the company said in a statement. “Kirk has a decade of experience running treasury and capital markets for large fleet companies, and is well-known on the capital markets side. We’ve been working with him over the course of this year, and given our renewed focus on our acquisition and financing approach, now was the right time to ask him to step in to manage our upstream banking relationships and the fleet management.”
The moves comes amid other big changes in automotive, and the growth of the so-called sharing economy, which promises to further shift notions of ownership in this digital and mobile age.
In September, for instance, car-sharing marketplace Getaround reportedly said it was looking to raise up to $201.5 million in Series D extension funding, which would boost the company’s valuation up to $1.7 billion. Founded in 2009, the San Francisco-based company has already received more than $400 million in total venture capital funding from investors including GV, Madrona Venture Group and actor Ashton Kutcher. Its Getaround Connect device now operates in the United States, as well as in seven European countries: Norway, France, Germany, Spain, Austria, Belgium and the U.K.
In April, Getaround announced its acquisition of Drivy, a Paris-headquartered car-sharing startup that operates in 170 European cities. And in June, the company announced that it was making a $12 million acquisition of Nabobil, which will boost growth and improve the user experience in the Nordic region through the integration of Getaround’s connected car technology.
That’s hardly all.
Earlier this year, Turo, a car-sharing startup, raised $250 million from IAC in a Series E funding round, which puts the company’s valuation at above a billion dollars. IAC is an internet media company that previously owned Match.com and OkCupid. The funding round brings the company’s total amount raised to $450 million since its inception in 2009, when it was called Relay Rides.
Turo will use the money to expand and help with customer relations.
Turo CEO Andre Haddad said in a blog post that the company aims to follow its mission of “putting the world’s one billion cars to better use, and our vision that wherever in the world you are, you can find the perfect vehicle for your next adventure from a trusted Turo host.” IAC and Turo teamed up to help Turo reach “household name” status. Turo has about 400,000 cars available on its platform, with more than 10 million both listing and renting.
Even with the recent layoff news from Fair, companies are still driving toward the goal of more online and mobile car subscriptions.