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The Airbnb of Cars Just Bought A Startup From Its Newest Investor

Sep 06, 2017

Turo, the San Francisco-based company that lets people rent out their vehicles to strangers via an app, has raised $92 million and is acquiring Croove, a car-sharing service launched in Germany last year by Mercedes-Benz.

The Series D funding round was led by Mercedes-Benz parent company Daimler (ddaif) and South Korean conglomerate SK Holdings. Liberty Mutual Strategic Ventures and Founders Circle Capital joined the round as well as existing investors August Capita, Canaan Partners, Kleiner Perkins Caufield Byers, GV, Trinity Ventures, and Shasta Ventures.

The Series D round brings the company's total funding to $193 million.

Jan-Michael Graef, chief financial officer at Daimler's CASE organization and Jungho Shin, vice president of portfolio management at SK Holdings, will join Turo's board of directors.

Turo, which launched in 2009 as RelayRides, says it has quadrupled its signups and vehicles listings in the past two years. The company says it now has more than four million users and over 170,000 cars listed.

"We're seeing very strong momentum in the underlying metrics of the business," Turo CEO Andre Haddad, who joined the company in 2011, told Fortune in a recent phone interview. Haddad believes these new investors—Daimler, SK Holding, which is an investor in South Korea's top car-sharing company SoCar, and Liberty Mutual—will "turbo-charge" the company's international expansion plans, become more closely aligned with automakers, and provide expertise in the insurance business. Liberty Mutual already provides commercial insurance for vehicles on the Turo platform.

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The acquisition of Croove, which operates in Berlin and Munich, gives Turo an immediate presence in Germany. Turo already operates in the U.S., Canada, and the UK. The company has ambitions to expand to more European countries as well as South Korea and other Asian markets. Croove will transition to the Turo brand in the next two months.

"International expansion for us is really a big deal because of the global network effect in this business," Haddad said, noting that many of its users are tourists and business travelers who are renting vehicles from people who flying out of town.

In other words, people living in Germany who use the app in their home country are more likely to use the same service when they travel to cities in the U.S.

One of Turo's big selling points is the potential for "hosts" to offset the cost of financing a brand new vehicle by renting out their car or truck just a handful of days each month. For example, Turo says owners of new Tesla Model S vehicles can earn $1,021 on average per month by renting the electric vehicle out an average of seven days a month. Turo estimates it costs $1,020 a month to finance a new Tesla Model S.

"That's good news for the car industry because it enables people to afford cars, and in particular, to afford nicer cars, the cars they really want to drive," Haddad said. "We think Turo can be a real asset for the automotive industry."

Daimler shares the same point-of-view, Haddad added.

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