Heaps of cash—and criticism—are being thrown at the darlings of the sharing economy including transportation start-ups. The latest example is San Francisco-based Sidecar, a ridesharing app, which raised $15 million in another round of funding Monday from investors including Sir Richard Branson and Union Square Ventures. That's on top of the more than $20 million it had already raised earlier this year.
Sidecar competes directly with Uber, the transport start-up behemoth, which is valued at more than $18 billion, and its smaller competitor, Lyft, which has raised more than $330 million in funding. Both companies also are headquartered in San Francisco, where the collaborative consumption model among consumers, sometimes called the sharing economy, has taken off.
Sidecar will use the cash infusion to amp up its ridesharing services, said co-founder Sunil Paul, who declined to give the company's total valuation. Sidecar users find other riders and drivers heading in their direction, and connect with one another to cut costs by up to 50 percent compared with Uber, he said.
Paul did acknowledge the broad criticism transport start-ups are facing. While fans laud the companies affordable prices and market efficiency that swiftly connects drivers and passengers via mobile devices, critics point to issues like drivers' insurance and safety records. The start-ups also have faced opposition from taxi groups and local governments.
"I think this is like the early days of e-commerce, when not everyone recognized how big the opportunity was going to be," Paul said. "We are not just chasing the $11 billion spent annually in the U.S. ... We are chasing the more than $1 trillion that people spend on automobiles every year. If you believe what we are doing will only replace taxis, then yes, we are in a bubble."
But Paul and other ridesharing bulls contend the emerging transport business models are poised to alter the transportation space, and get drivers to ultimately evaluate the very need for car ownership. This, as other transportation changes also are on the horizon including driverless cars.