BlaBlaCar sets course for $100m fundraising

Investors are betting $100m that BlaBlaCar, a French start-up that facilitates long-distance car sharing, can become the next big sharing-economy success after Airbnb and Uber.

BlaBlaCar operates an online marketplace for connecting drivers travelling between cities with spare seats in their cars with passengers looking for a cheaper and more sociable journey than riding by train or coach.

Its name refers to the often chatty nature of the journeys; drivers and passengers can indicate on their profiles how talkative they feel.

Index Ventures – which has backed Dropbox, King Digital and Just Eat – is leading a funding round that is among the largest for a private European tech company in recent years. Based on other tech investments of a similar size, the fundraising is likely to value BlaBlaCar at $1bn or more. Existing investors Accel Partners, ISAI and Lead Edge Capital are also contributing.

“Empty seats in cars represent an infrastructure that is not being leveraged today for long-distance travelling,” said Dominique Vidal, partner at Index Ventures.

Founded in France in 2006, BlaBlaCar has attracted 8m members in 12 countries and transports 1m passengers every month. Members rate each other after a trip, in the hope of building mutual trust and overcoming potential customers’ concerns about safety.

Passengers pay just enough to cover the cost of fuel and other running costs, ensuring that the driver’s existing insurance is not invalidated.

This means the rewards for taking passengers are not as great as they might be by, for example, signing up to become a driver for Uber, which touts annual income in US cities such as San Francisco or New York of about $90,000.

Because drivers cannot make a profit, BlaBlaCar is a “true” sharing-economy community, according to Nicolas Brusson, its co-founder. In contrast many Airbnb hosts or Uber drivers derive their primary income from the services.

BlaBlaCar takes a cut, usually a 12 per cent commission, added to the fee that each passenger pays, but it is not yet profitable.

“What we work on is the trust of the community, then the users create the transport network,” Mr Brusson said. “The more peer reviews you have, the more mainstream members you will get.”

Two years ago, when BlaBlaCar raised $10m in its first significant round of funding, even some of its current investors believed car-sharing would remain a niche activity.

With the rapid growth of the sharing economy, in which drivers share their cars over short distances through Uber and Lyft or rent out their homes to strangers via Airbnb, confidence – and expectations – around BlaBlaCar’s model has grown.

“These guys are reinventing the transportation market for long distances,” said Philippe Botteri, a partner at Accel, which has also invested in Uber rival Hailo.

With no fixed costs or asset ownership, and drawing on underutilised existing capacity, BlaBlaCar would be the cheapest option for trips of dozens or hundreds of kilometres, he added.

BlaBlaCar estimates that it carries more passengers every month than Eurostar trains – without the multibillion-dollar infrastructure costs. The head of SNCF, France’s national railway, has said BlaBlaCar is one of its biggest competitors, in what remains the start-up’s largest market.

This popularity has spawned competitors, such as Carpooling.com of Germany. Mr Brusson said that, with its new war chest, BlaBlaCar would be able to acquire rivals to aid its expansion, while its scale gave it an advantage.