Zipcar, whose stock-market performance has left something to be desired since its banner IPO, got good news today when Avis Budget Group announced that it would buy the startup for $500 million in cash.
"By combining with Zipcar, we will significantly increase our growth potential, both in the United States and internationally," said Avis CEO Ronald L. Nelson. "We see car sharing as highly complementary to traditional car rental."
But some Zipcar shareholders have already objected to the sale price, arguing that it undervalues the Cambridge, Mass.-based company, which was once worth over $1 billion on the stock market. The securities litigation firm of Powers Taylor LLP plans to investigate the sale and file a lawsuit to block its progress until a higher price can be obtained for shareholders.
A brief history of Zipcar, from inception through public offering to buyout, follows.
1999: Two women in Cambridge, Mass., Antje Danielson and Robin Chase, whose children attend the same kindergarten, conceive the idea for Zipcar. Chase has business experience and a master's degree in business administration, while Danielson understands the technology and market. After putting together a basic business model, they seek feedback from Glenn Urban, dean of the Massachusetts Institute of Technology's Sloan School of Management and Chase's former mentor.
Urban surprises them with an optimistic assessment of their company's potential for success. "Your business plan is way too slow. You've got to sale it up by a factor of three," he says.
June 2000: The first Zipcars debut on the streets of Boston and Cambridge. Danielson and Chase raised $75,000 before the launch, $25,000 of which was a last-minute angel investment that allowed them to lease the cars they needed. Not long before launch, Zipcar has only $68 in the bank. By February 2002, it has offices in Washington, D.C., and New York City.
December 2002: Zipcar raises $4.7 million in funds in its series B round.
February 2003: Scott Griffith replaces co-founder Robin Chase as company CEO, though Chase remains on Zipcar's board of directors. She will spend the 2004-2005 academic year as a Loeb Fellow at the Harvard University Graduate School of Design.
November 2006: Zipcar opens a London office as part of a European expansion effort. The company also closes a venture funding round of $25 million. The funds will be used to scale the business at home and abroad. The company plans to have more than 100 vehicles on the streets of London by January 2007.
October 2007: Zipcar merges with Seattle-based rival Flexcar, with the resulting company retaining the name and Cambridge headquarters of Zipcar. While Griffith remains CEO of the new company, Flexcar CEO Mark Norman becomes president and chief operating officer, a position he holds to this day.
June 2009: The Zipcar iPhone app is announced at the Apple Worldwide Developer Conference. With the app, users can locate Zipcars, check on their availability, reserve them and even unlock them. This year, Zipcar becomes the world's largest car-sharing service.
April 2010: Zipcar buys Streetcar, the largest British car-sharing company, for about $50 million. With 50,000 members in the U.K., Streetcar posed 2009 revenue of about $25 million. These will now combine with Zipcar's 12,000 U.K. members to create a unified brand.
December 2010: In a venture funding round, Zipcar raises $21 million from Meritech Capital Partners and Pinnacle Ventures.
April 2011: Zipcar goes public, earning a market valuation of more than $1 billion, though in the months to come its stock price will fall from a high of more than $28. On Dec. 31, 2012, it will trade at $8.24.
July 2012: With the acquisition of established Austrian company CarSharing.at, which has 10,000 members in cities across Austria, Zipcar expands its European presence.
November 2012: By now, Zipcar has 767,000 members, more than 700 employees and 11,000 cars available in the U.S., Canada and Europe.
January 2013: Avis Budget Group announces its intent to buy Zipcar. Provided that a threatened shareholder lawsuit over the purchase price doesn't halt or delay proceedings, the deal should be completed in spring 2013. Zipcar, which will operate as an Avis subsidiary, will retain its CEO and chief operating officer and proceed with plans to move into new headquarters in Boston.