Getaround Secures $25M Debt Financing for Series E

Getaround, the Silicon Valley-based startup specializing in peer-to-peer car sharing, has obtained a $25 million loan from Horizon Technology Finance Corporation. This financial arrangement was announced just one month following Getaround’s successful fundraising effort, which secured $140 million from investors including SoftBank Vision Fund, Menlo Ventures, Reid Hoffman, and Reinvent Capital led by Mark Pincus.

This funding round indicates that Getaround is exploring alternative methods to obtain capital while minimizing potential dilution for its executives and existing investors.

According to a Getaround representative, “Horizon offered a financing option that will provide us with extra resources to further our objectives, similar to the benefits we received from our recent Series E funding.”

Dan Devorsetz, Horizon’s chief investment officer, shared with TechCrunch that providing venture debt has been a component of Getaround’s financial strategy throughout 2020.

“This approach broadens their funding options and reduces the overall expense of capital, while also lessening the impact of equity dilution from additional investments,” he explained. While he did not specify the intended use of the debt capital, he stated that it will enable Getaround to address both its immediate working capital requirements and its long-term strategic growth plans.

Getaround, like many companies in the travel sector, initially faced challenges at the onset of the pandemic as governments implemented stay-at-home directives to control the spread of the coronavirus. The company experienced a 75% decrease in bookings during March, which led to the layoff of 100 employees. Getaround also successfully applied for and received a loan through the Paycheck Protection Program to assist in retaining its workforce. The company previously communicated to TechCrunch that this program “significantly lessened the negative impact on our organization” resulting from the lockdowns and related restrictions.

Demand began to recover in May as travelers increasingly favored personal vehicles over air travel for shorter journeys. Sam Zaid, Getaround’s CEO, recently informed TechCrunch that the company’s global revenue has more than doubled compared to pre-pandemic levels.

By July, Getaround had brought back all previously furloughed employees.

The mobility sector has shown several indications of recovery. This week, Uber reached its highest stock price since its initial public offering, and Lyft’s ride revenue has improved enough to reassure investors.

The key takeaway: Positive signs of recovery are emerging. However, the possibility of another surge in COVID-19 cases raises concerns about whether these gains will be sustained.

Getaround’s decision to seek debt financing shortly after securing a substantial venture capital investment may suggest the company is preparing for a potential future lockdown and a corresponding decline in bookings. Unlike many other mobility companies, Getaround does not own the vehicles listed on its rental platform, which could provide a degree of resilience during a temporary economic downturn.