Silicon Valley peer-to-peer car rental startup Getaround has received a $ 25 million loan from Horizon Technology Finance Corporation. The financing announcement comes a month after Getaround raised $ 140 million from investors including SoftBank Vision Fund, Menlo Ventures, Reid Hoffman and Mark Pincus' Reinvent Capital.
Getarounds Send signals that the company is looking for new ways to secure cash without further diluting executives or investors.
A Getaround spokesperson said, "Horizon was an opportunity that will give us additional capital to accelerate our plans in the same way as our recent Series E fundraiser."
Dan Devorsetz, Horizon's chief investment officer, told TechCrunch that risk leverage was part of Getaround's 2020 funding strategy.
"It diversifies funding sources and lowers the total cost of capital while reducing the dilutive effects of incremental equity," he said. Although he didn't want to be clear about where the leverage is going, he said the debt allows Getaround to meet both "working capital needs and long-term strategic growth initiatives".
Getaround, like many travel-related startups, struggled at the start of the pandemic when governments stayed home to prevent the spread of the disease caused by the coronavirus. Bookings fell 75% in March, forcing Getaround to lay off 100 employees. The company also applied for and received approval for a paycheck protection program loan to keep the employees. Getaround previously announced to TechCrunch that due to bans and coronavirus restrictions, the program has "helped reduce the otherwise serious health impact of our business."
Demand returned in May when travelers turned to cars rather than flights for short-haul trips. Sam Zaid, CEO of Getaround, recently told TechCrunch that global sales have more than doubled compared to pre-COVID base values.
By July, Getaround announced that it had reinstated all employees on leave.
There have been isolated signs of a comeback throughout the mobility industry. This week, Uber had its highest closing price since going public, and Lyft saw a rebound in ride earnings that gave investors some peace of mind.
The result: the green shoots have sprouted. But will another wave of COVID-19 suffocate those buds before they can take root?
Getaround's decision to resume debt financing so soon after starting a six-figure venture capital round could signal the company's expectation of another lockdown and subsequent decline in bookings. Unlike other mobility companies, Getaround doesn't own cars, trucks and SUVs on its rental platform. This could help the company weather a brief downturn.