Reprinted from The New York Times:
Limos.com Raises $10 Million from Austin Ventures
By MICHAEL J. DE LA MERCED – March 29, 2011, 7:48 am
12:56 p.m. | Updated
Austin Ventures is betting that after flights and hotels, limousine rentals will be the next sector ripe for transformation by the Internet.
The venture capital firm announced on Tuesday that it had invested $10 million in Limos.com, a start-up focused on bringing online reservations to black-car bookings. Specific terms were not disclosed, though Mike Dodd, a partner at Austin Ventures, told DealBook that the firm would take a significant stake in the business and two seats on its board.
Led by several co-founders of the online travel site Hotwire.com, Limos.com aims to bring the same sort of online reservation model to the much more fragmented world of town car service operators. (The executives bought Limos.com from a another car operator in early 2008 for about $5 million, and have run the business on what T. J. Clark, the company’s chief executive and a former vice president at IAC/InterActiveCorp, said was a tight budget.)
The Limos.com team and Austin Ventures see the industry as one with high potential: private cars generate some $17 billion in revenue, but less than 5 percent of bookings are made online, the two say. That could improve if customers ultimately see lower prices from more transparent pricing.
“We think this market is in its first inning,” Mr. Dodd said. “Having town car service with similar pricing to taxis, that’s pretty unique value proposition that hasn’t been told yet.”
But building on the business has meant a lot of dialing up limo operators and convincing them of the benefits of joining one Web-based reservation system, executives say. So far, Limos.com has signed up about 2,000 limo operators of an estimated 8,000 across the country, Mr. Clark told DealBook.
Limos.com is also expanding a new corporate arm, Limos for Business, that is meant to tie into corporations’ backend systems. The company has signed up 750 companies, who have more than 10 employees using the system so far.
Limos.com had not been looking for venture capital, Mr. Clark said, but had crossed paths with Austin Ventures, which had been interested in new investments in the travel industry. The new capital will go toward more marketing and investing in the company’s technology systems, including G.P.S.-enabled Web apps for smartphones.
It will also go toward expanding abroad, where it has already established outposts in several dozen countries, including China, India and South America over the last year.