[Updated 12:10 pm] Rujul Zaparde and his friends weren’t purposely looking to unlock a legendarily tough business challenge when they founded FlightCar, a venture-backed startup that offers cheap parking for travelers who rent their wheels to someone else.
“We really thought this was a cool idea, and we really wanted to test this out,” Zaparde says.
With some $6 million in private funding, plenty of local regulatory hurdles, and an expanding network of cities under their belts, you could say the test is well under way.
Today, Cambridge, MA-based FlightCar is officially adding Los Angeles to its roster of cities, hoping to capture a slice of the millions of travelers who move through that airport every year—especially during the holidays. They join Boston and San Francisco as places where car owners and would-be car renters can use FlightCar’s service.
The startup also is rolling out a new mobile-focused Web app, which will replace the decidedly old-school previous route of calling 1-877-Flight-Car when you were at the airport and ready to pick up your ride.
Here’s how it works: car owners leaving on a trip can park their ride for free at FlightCar’s lot. In exchange for that cheap rate, you have to make your car available for other FlightCar members to rent while you’re gone. [Clarified to note free parking.]
FlightCar says its renters are pre-screened for good behavior, and has up to $1 million worth of insurance covering damages to cars on top of that. If a parked car gets rented enough, the owner can make some cash, too—FlightCar says it will pay up to $20 per day, depending on how nice the car is. Since launching in February, FlightCar says it has listed more than 3,500 cars. [Added listing statistic.]
It’s a twist on the general push by a number of digital startups to make new or better markets out of the surplus personal property people might want to rent. The king of this kind of company in the most recent few years is Airbnb, which lets homeowners make money by renting their digs out to strangers.
Like Airbnb, FlightCar went through the prestigious Y Combinator startup accelerator program in San Francisco (and, like many companies in the so-called “sharing economy” sector, it has billed itself as an “Airbnb for X” kind of company).
That’s one of the reasons we are really excited to have Zaparde at our Dec. 9 Xconomy event in New York, called the Hardtech Revolution: Makers, Markets, and Mobile. It’s a fast-moving half-day forum of smart folks tackling tough challenges in hardware, marketplaces, and connected devices of all kinds. Make sure to get your tickets here before the best rates expire.
Assembling a two-sided market, like FlightCar is attempting to do, is notoriously hard for a small company.
Zaparde chuckles when I ask him if this particularly notable challenge had any sort of special attraction for the FlightCar crew, which also includes co-founders (and fellow self-described “Ivy League college teenage dropouts”) Kevin Petrovic and Shri Ganeshram.
“It’s definitely not easy,” he says. “Believe me, there’s nothing special about that that was attracting us.”
Investors have taken notice, tough. After getting its seed funding, FlightCar loaded up this spring with a $5.5 million Series A round from General Catalyst, Softbank Capital, Airbnb founder Brian Chesky, and several others.
Competitors include startups, like the personal car-rental service RelayRides, along with traditional car-rental businesses. Some of those old-school players, by the way, have to pay hefty fees to local governments for the privilege of grabbing customers at the airport. And, as you might expect, local officials and established companies haven’t exactly welcomed the upstarts with open arms.
San Francisco has gone the farthest, with the city attorney suing FlightCar for illegally avoiding those airport fees. FlightCar disagrees with that interpretation of the law, of course.
Officials in Boston have been more cautious, saying only that they do not have an operating agreement with FlightCar. “We’ve exchanged communication with them, and have met with some of the folks at Massport,” Zaparde says. “I think they want to sort of see how our business plays out, and also see what happens with us and SFO.”
Zaparde says Los Angeles appears to be an easier hurdle when it comes to regulations. Existing, traditional car-rental companies are allowed to pick up customers at the airport without paying fees, he says, so FlightCar (which maintains that it’s a “peer-to-peer car-sharing company”) should not have problems like it did in San Francisco.
It remains to be seen, however, what LAX officials actually have to say about FlightCar operating out of their airport (the FlightCar parking lot is not adjacent to the airport itself). [Added location note.]
“We haven’t had any conversations with them yet,” Zaparde says, “but we do anticipate we will in the future.”
