SoftBank Invests in a Flexible Car-Leasing App Helping Uber Grow
(Bloomberg) -- SoftBank Group Corp. just led a $385 million funding round for a flexible-leasing app that makes cars more accessible to Uber drivers and other gig-economy workers.
Fair, led by TrueCar Inc. co-founder Scott Painter, has continued to grow since buying lease contracts in January from Uber Technologies Inc.’s shuttered subprime-lending unit. Fair has an exclusive contract with Uber in the U.S. to lease cars to its drivers, who are now about half of Fair’s 20,000 active users.
“With SoftBank as an investor, we have a clear focus on Uber and supporting their growth in the U.S.,” Painter said in an interview. Fair will use the fresh equity as collateral to borrow more money to build up its vehicle inventory and expand overseas. The company will announce new international partnerships in 2019, Painter said.
SoftBank’s Vision Fund, a nearly $100 billion pool of money backed by billionaire Masayoshi Son, has already led investments in ride-hailing companies including Uber and China’s Didi Chuxing and has bought stakes in General Motors Co.’s Cruise and truck app Manbang Group. The fund has also invested in e-commerce startups in food and package delivery that depend on gig workers to transport goods in their cars.
Fair lets customers lease a used vehicle for however long they want. The company runs a credit check off an applicant’s driver’s license. Users can then select cars from a network of 3,000 local dealers that are listed along with monthly payment amounts. The car can be returned with five days’ notice, and there’s no traditional financing process needed because Fair maintains ownership of the vehicle.
“We’re not lending ride-share drivers a big pile of cash and hoping they pay us back,” Painter said. “We’re giving them access to a vehicle, and we require a form of payment upfront.”
Painter, who stepped down from TrueCar in 2015 following spats with some high-profile auto dealers, is now relying on them to provide inventory to Fair’s users. To make its service appealing to dealers, the company lets them offer inventory on the app for free. The startup makes money by charging users a fee that’s baked into the price of their monthly payment.
Fair has raised a total of $500 million in equity from investors including Daimler’s Mercedes-Benz, Penske Automotive Group Inc. and BMW i Ventures. It’s raised $1 billion in debt from investment banks and a mobility fund created by venture firm Sherpa Capital. Last month, AutoNation Inc., the largest dealer chain in the U.S., said it would supply vehicles to Fair.
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