Less than six months after raising a $30 million Series A, car rental startup Kyte says it has secured a $200 million line of credit from Goldman Sachs and Ares Management Corp. as it kicks its expansion goals into fifth gear.
The San Francisco startup leveraged its fleet of rental vehicles to land the loan so it can start accelerating its business in a capital-intensive industry, co-founder Ludwig Schoenack told me.
In other words: Cars are expensive to buy, maintain and upgrade.
The team is also working on raising a Series B but decided that a line of credit would be the best option for building out its fleet.
"It's not diluted, so in the end it's money that comes in and goes back out," Schoenack said, and "we have a real business in the real world, and we were looking for real capital against that. That's a different thing to do between a Series A and Series B. Doesn't mean we're not also going to raise another round. That is going to come after this."
Kyte says it currently delivers more than 10,000 vehicles monthly across 13 cities in the U.S. An international expansion could come at some point, but the company is focused on expanding here for the time being.
It's also being strategic about which markets it enters; it goes into metro areas with a lower percentage of car ownership or where there are other trends emerging that show a potential market fit.
"We will continue to grow very aggressively. The credit facility has been one of the things that now unlocks a very different level of growth," Schoenack said.
The company says its bookings have grown six-fold, and it currently has more than 100 employees and a few hundred contract workers, whom they call "Kyte surfers," that deliver the vehicles.
Their delivery workers use other forms of transportation, like scooters, to get around in between deliveries. Eventually, Kyte envisions managing a fleet of fully autonomous vehicles that will deliver themselves to customers' doorsteps.
In that fully autonomous future, the company will be competing with Tesla, Cruise, Waymo and others. The industry is a long way off from deploying fully autonomous fleets, or what is considered Level 5 autonomy. Cruise and Waymo have been testing Level 4 vehicles, a designation that indicates they are designed to handle all functions autonomously without the need for human intervention under certain, but not all, conditions.
For now, Kyte competes with alternative options like ZipCar, Uber, Lyft, taxis and public transportation as it builds out what it considers a transitional product within the market.
The rental car industry is expected to grow into a $141 billion market by 2028, up from $98 billion in 2020, according to a report from Grand View Research.
