The past decade has seen much transformation of transportation, as seen with breakout companies like Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT). But for the founders of startup Upshift – Ezra Goldman, who started a dockless bikeshare service in 1999 and Ayako Hiwasa, a social entrepreneur – believe that there is still much room for interesting ideas in the space.
Now Upshift is essentially reimagining the traditional car purchase model.
To prove this out, Upshift is raising capital on the crowdsourcing platform, Republic. The valuation of the round is at $8 million.
Then how does Upshift work? Let’s take a look at the workflow. If you need a car, you text Upshift for where you want the vehicle delivered and at what time. The company will then drive it to you, all gassed up and clean.
You can then take it anywhere you want. Keep in mind that there are no mileage restrictions. And when you are finished, Upshift will pick up the vehicle.
OK, why do this instead of getting a ride from Uber or Lyft? According to the company, the main reason is that ride-sharing is really not effective or affordable for longer trips. Besides, there are times when you just need access to a car.
In terms of the business model, it is based on a subscription, which ranges from $199 to $499 per month. This is according to the number of days you use the car (the unused days can be rolled over). There is also a $750 activation fee. Oh, and the insurance, maintenance and concierge parking are all included. But of course, you will need to pay the taxes, tolls and gasoline.
And what about the market opportunity? It is certainly large. According to Upshift’s own analysis, it is a whopping $26 billion. This is based on roughly 7 million people spending $295 per month in the U.S.
Traction for Upshift
So far, there are about 1,500 account signups and there have been over 3,000 trips. Of these, 99 are subscribers and they generate $22,000 a month in revenues.
Upshift has two 2019 Escape SUVs, which have API connections. Ford (NYSE:F) provided these vehicles as part of a partnership, which included $250,000 in non-dilutive project financing. Upshift has also obtained $442,000 in an equity investment from BMW/MINI’s accelerator along with more than 80 angels (one is the co-founder of NerdWallet).
Then there is debt financing of $458,000 for the vehicles. The lenders are Midway Fleet Leasing and Toyota Financial Services.
However, if you want to try the Upshift service, you will have to be patient. There are over 1,500 on the waiting list to join.
The Bottom Line On Upshift
With the crowdfunding, Upshift raised $263,107 from 1,245 investors (the minimum investment is $100). The financing is structured as Crowd SAFE (Simple Agreement for Future Equity) instrument. This means that an investor does not receive equity upfront. Instead, it is allocated when there is a “trigger event” like an IPO or acquisition.
The Upshift funding also has perks that are determined by the amount invested. For example, if you invest $500, then you get a social media mention, a thank-you note from the founders and an offset carbon equivalent for taking one car off the road for one month. Or, if you invest $15,000, you get a conference call or dinner with the founder and an exclusive organic cotton T-shirt.
But of course, there are considerable risks to take into account with this investment. Upshift is still in the early stages and is currently building its mobile member app, vehicle integration, fleet management system and predictive analytics. There is also the competitive environment. After all, a company like Uber or Lyft may enter the category.
Thus, before making an investment, it’s important to do your own due diligence.
Tom Taulli (@ttaulli) is an advisor and author of various books and online courses about technology, including Artificial Intelligence Basics, The Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s. As of this writing, he did not hold a position in any of the aforementioned securities.