French long-distance ride-sharing service BlaBlaCar has raised a solid $100 million from VC funding — the largest VC funding ever for a French startup — to expand its service and network globally. The funding was led by Index Ventures, with contributions from existing investors Accel Partners, ISAI and Lead Edge Capital.
“BlaBlaCar has a huge potential market,” said Martin Mignot from Index Ventures. “Everybody needs to travel long distance, that’s why ride-sharing makes sense. Comparatively, Uber or even cabs are all about convenience. BlaBlaCar is both convenience and necessity.”
Founded in 2004, BlaBlaCar now operates in 12 countries across Europe, has a community of 8 million members and is used by more than a million members every month. The website matches members looking to travel with drivers seeking to share the cost of their journey. Essentially, it is the college Ride Board on a much larger scale — both in terms of community and distances.
“Our ambition is to go further than what we have today, even though we still need to consolidate what we began,” co-founder and CEO Frédéric Mazzella told TechCrunch. “At this point, we could either try to optimize our business to become profitable, or we could invest with this proof of concept to expand now and become profitable later.”
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The company suggests an amount each passenger should pay a driver based on fuel, car usage and trip distance, and on an average takes a 10 percent cut. Its USP lies in the fact that it's much cheaper to share a ride than fly or take the train (usually 50-90 percent less than a train). Easy connections, trust and low cost are key. People are required to use real names and photographs and contact information is verified by the company. Co-passengers rate each after a ride, keeping the community responsible. Since it runs on a collaborative, community-based revenue-sharing model, the company hasn't faced any legal issues so far.
“We try to be careful so that drivers don’t make a profit … they offset a cost,” co-founder and COO Nicolas Brusson explained in earlier interview. “We don’t recruit drivers, we don’t hire drivers. It’s real people that drive between these routes.”
With this latest infusion of capital, the company is setting its sights on Eastern Europe, Turkey, India and Brazil but it does not yet plan to enter the US market for several reasons — the distance between many major cities being one. TechCrunch views the recent round of funding as significant because the company found VC money to fuel its growth, something that isn't easy with French VC firms. The funding also shows that firms outside France are looking to invest.
“The first VC firms I saw were in New York and the Silicon Valley, and I was pitching a $27 million round. We realized that people really understood what we were doing now,” Brusson said.
TechCrunch projects BlaBlaCar as the next French billion-dollar tech company, after advertising technology firm Criteo‘s $250 million IPO on the NASDAQ in October.
Another ride-sharing giant, Uber, recently received a $1.2 billion funding, pushing the company's valuation to $18 billion. With roughly 550 employees, the company's investment has grown a whopping 6,000 percent in five years, says a VentureBeat analysis. While companies such as BlaBlaCar and Uber focus on the journey, another big player in the sharing economy, Airbnb, focuses on the destination. The vacation-rental service has grown 750 percent since 2009 to $450 million in funding, a $10 billion valuation, and over 600 employees. The Wall Street Journal and Dow Jones' VentureSource tracked VC-backed companies that are valued at $1 billion or more; Uber and Airbnb top the list.
The sharing economy is growing exponentially and even now poses serious a competitive threat to traditional businesses. Many have decided to join the growth stream, with several automakers companies launching car-sharing services such as BMW's DriveNow, Volkswagen's Quicar, Daimler's Car2Go, Toyota's Rent a Car and Dodge's Dart Registry. And Ford, GM and Toyota have partnered with another giant of the sharing company — Uber — to offer services together.