RelayRides Scores Google VC Funds, Kicks Off in SF

RelayRides, which aims to help people rent out personal vehicles, launched its distributed car sharing service in San Francisco today, and announced its first round of investment from Google Ventures and August Capital. The idea is part of a growing trend in which companies are using the web and cell phones to help people share “stuff.”

Founded in 2009, RelayRides began offering what founder and CEO Shelby Clark calls “neighbor to neighbor” car sharing in the Boston area in September. The concept is like “cloud computing for cars,” as Sunil Paul, CEO of competitor Spride Share, has put it to us. With cloud computing, users can share computing infrastructure over the Internet, accessing software, data and other resources on demand. With transportation and car sharing, the idea is to provide mobility as a service. At a basic level, rather than buying a car, you could buy access to a car whenever you need it.

Piggybacking on the idea of popular car sharing services like Zipcar, RelayRides “makes it easier to live without a car,” said Clark, and can lead to “stronger communities.” Collecting feedback from users in Boston, RelayRides has learned that people on both sides of the car share equation — vehicle lenders and borrowers — “feel like they’re helping each other,” either by providing some extra income through the rental fee or by providing wheels when they’re needed. Car owners set their own hourly rate and get 65 percent of the fee, while RelayRides takes a 15 percent cut. The remaining 20 percent goes toward insurance.

RelayRides is still solidifying its deal with Google Ventures and August Capital, and the startup tells us that the amount of investment should be disclosed in the next few days. RelayRides has previously raised $500,000 in angel investment, and Clark said it has already received some funds from Google Ventures. He declined to comment on questions about profitability.

Starting on Tuesday, “a handful of vehicles” will be available in the San Francisco fleet. Car owners in San Francisco can enroll on the company’s website, prompting a call from RelayRides to answer any questions. From there, the car owner can schedule installation of some hardware, which enables communication with RelayRides’ servers and controls access, so only a user with a current reservation can unlock and start the vehicle.

Vehicles enrolled in the Boston RelayRides fleet have a keypad interface that lets drivers extend a reservation, but Clark said the San Francisco fleet will feature an upgraded, more streamlined system without the in-vehicle interface.

Cutting the installation time to 1 hour, from 3-4 hours with the older system, the hardware changes could be a smart cost-cutting move for the company if it’s looking to expand to more markets. According to Clark, the company aims to serve not only cities but also areas with lower population densities — the suburbs and “urban fringe” — where traditional car sharing providers can’t profitably operate. Without the cost of owning and managing its own vehicle fleet, said Clark, RelayRides can afford to have more down time, or lower utilization rates for each vehicle.

For security, a RelayRides vehicle’s ignition will be immobilized except for access by the car owner or an authorized borrower. General vehicle locations can be viewed without a reservation, but users only find out the exact address via text message once the rental is finalized. RelayRides also emails the user a map at that point marking the vehicle location (each enrolled vehicle is outfitted with a GPS system for finding the vehicle and tracking mileage ). As Clark put it, since the keys are kept in the car and its location is being advertised, it would be “asking to be stolen” without these precautions.

Also on Tuesday, RelayRides will begin screening drivers who sign up on the company’s website (the company checks for a history of violations or tickets). Once approved for membership, drivers can reserve vehicles through RelayRides’ website and unlock a car during their time slot with a smart card. Next month, users will also be able to register San Francisco’s Clipper transit pass for this purpose, with RelayRides reading a digital signature on the card and assigning it to a particular user, said Clark.

For companies like RelayRides and Spride Share, insurance is one of the biggest bugaboos. Until recently, insurance regulations in California and other states allowed insurance companies to void a vehicle owner’s insurance policy if the car was rented out to others.

In September, however, legislation called AB 1871 passed in California that establishes rules for when a vehicle owner’s insurance policy stops applying, and when a commercial policy held by a service provider like RelayRides would kick in. RelayRides holds a $1 million supplemental insurance policy that goes into effect during each reservation period.

Clark believes the legislation “forced a lot of people to take a position on personal car sharing.” By clearing up a “gray area” for this type of business model, he said, the legislation has helped ease RelayRides entry into California. (San Francisco also garnered the most votes in a poll on RelayRides’ website asking where the company should expand next.)

Spride Share waited for AB 1871 to go on the books before launching its pilot program with local car sharing provider City CarShare. Asked whether RelayRides considered pursuing a similar partnership for its West Coast launch, Clark commented that Spride “cemented a relationship with City Car Share early on.” That left only Zipcar (s ZIP) as a potential partner, he said, and RelayRides did not consider linking up with the car sharing heavyweight.

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