Ridesharing service Sidecar raises $10 million, tweaks model

SAN FRANCISCO Wed Feb 19, 2014 9:00am EST

SAN FRANCISCO Feb 19 (Reuters) - Ridesharing service Sidecar has raised $10 million from investors including Union Square Ventures, the company announced Wednesday.

The new funding, led by Union Square, the high-profile firm that helped back Twitter, Tumblr, and Zynga, will help bring more credibility to San Francisco-based Sidecar. Its service, which uses a smartphone-based app to match riders with drivers, is currently available in fewer cities than rivals Lyft and UberX.

The funding comes as Sidecar tries a new approach to fares: giving riders and drivers more say over their rides and fees. Like its competition, Sidecar relies on a network of drivers who usually use their personal cars to provide rides for pay.

Under Sidecar's new system, also announced Wednesday, a driver with a pricier car or a sterling reputation from drivers could choose to charge a premium, say 1.25 times the base rate.

Similarly, riders will be able to choose based on factors such as price, proximity, the driver's ratings or vehicle type.

Typically, ridesharing customers have no choice over the ride they obtain. After tapping in their pickup location, they wait until a notification arrives that a driver is on the way. For their part, drivers have had no say over fees, letting the app set the price based on factors such as distance.

In markets where Sidecar has tested the system, including Los Angeles, it has experienced a 50 percent increase in rider engagement, meaning 50 percent more drivers on the roads and riders requesting lifts, it said. One popular use case is female riders requesting female drivers, said Sidecar founder and chief executive Sunil Paul.

Sidecar, founded two years ago, is currently available in the San Francisco Bay Area, Los Angeles, Long Beach, San Diego, Seattle, Chicago, Charlotte, Boston and Washington, DC.

Union Square's Fred Wilson will take a seat on Sidecar's board, the company said.

Sidecar previously raised $10 million in 2012.

New investors Correlation Ventures, Avalon Ventures, and SoftBank Capital also participated in the funding round, alongside existing investor Lightspeed Ventures. Avalon's Rich Levandov will become a board observer, Sidecar said.

Lyft last raised $60 million in May. Uber, which runs its low-cost UberX service alongside a pricier town-car service, raised $258 million in August.

Ridesharing has come under fire lately, in part because of questions over the type of insurance drivers carry. Sidecar carries a $1 million-per-ride insurance policy for liability, and says it is working on adding insurance for other types of claims.

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Comments (3)
SeanOSullivan wrote:
Sidecar, Uber, Lyft and Hailo are all really cool forms of taxi-like transport services, so it’s very newsworthy and I’m glad to see Sidecar has gotten some additional finance from some decent venture names.

But Reuters, shame on you for calling these on-demand car services “ridesharing”. As Sidecar is highlighting here, these are premium services that are often more expensive than taxicabs. Where’s the “sharing” in that? Paid drivers earning a targeted $25-$35/hour is a great economic opportunity for drivers… but it’s not sharing.

Despite the efforts of the Ubers and the like to redefine ridesharing, it already has a legal and accepted definition: basically, it’s carpooling, when you are actually sharing the cost of the journey, like http://car.ma does with its Carma carpooling app. (Disclosure: I’m Managing Director of Carma).

That said, the idea of having peer-to-peer taxicabs is a fine idea and it is a great development in the marketplace for transport options in major cities of the world that have the density to support taxicab style services. So I’m not against the ideas of the service, just for the deceitful marketing claims that accompanying it, as well as the perversion of the term “ridesharing”.
Sean

Feb 19, 2014 2:09pm EST  --  Report as abuse
johnkh wrote:
Meanwhile, drivers for Uber X, Lyft, and Sidecar still conceal from their personal auto-insurance that their using their cars commercially. If their insurance companies knew, they would likely cancel their policies.

They have to do their driver-for-hire on the down low. It’s a funky business model, since it’s dependent upon drivers committing insurance fraud in order for their business to be financially viable and sustainable.

Feb 19, 2014 8:51pm EST  --  Report as abuse
johnkh wrote:
Meanwhile, drivers for Uber X, Lyft, and Sidecar still conceal from their personal auto-insurance that their using their cars commercially. If their insurance companies knew, they would likely cancel their policies.

They have to do their driver-for-hire on the down low. It’s a funky business model, since it’s dependent upon drivers committing insurance fraud in order for their business to be financially viable and sustainable.

Feb 19, 2014 8:51pm EST  --  Report as abuse
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