Rental automotive startup Kyte, which payments itself because the “greatest different to Hertz,” is pulling out of just about all of its main markets in the US and has lower its workforce roughly in half in a bid to outlive after exploring a sale earlier this yr.
The corporate is shrinking its operations to focus solely on San Francisco and New York Metropolis (together with Jersey Metropolis) as it really works to achieve profitability within the subsequent 18 months, CEO Nikolaus Volk instructed TechCrunch. Kyte has been exiting different main markets like Atlanta, Chicago, Boston, Washington, D.C., Philadelphia, and Seattle. It began telling prospects in Los Angeles that it’s suspending operations in that metropolis after November 7, as Curbivore reported Thursday.
Volk mentioned Kyte not too long ago lower between 40% and 50% of its workforce. The engineering, shopper, and progress product groups have been among the many most closely affected, former workers instructed TechCrunch.
“In a capital-constrained atmosphere, the place capital is tremendous costly, we’ve got to concentrate on our strongest markets,” Volk mentioned. “Laborious choices needed to be made to be able to maintain the enterprise right here.” Volk famous that New York and San Francisco are Kyte’s greatest markets, accounting for about 70% of its income.
Kyte raised $9 million in 2021 and closed a $60 million Collection B in 2022, all on the premise of being a versatile, easy-to-use rental automotive service that might go as far as to ship the car to your door. When asserting the Collection B elevate, the corporate mentioned it needed to be the world’s “largest operator of shared, electrified, and autonomous fleets.”
The corporate quickly expanded to greater than a dozen markets within the U.S., and began borrowing closely to finance the acquisition of its automobiles. The corporate struck a $200 million debt financing deal in 2022 with Goldman Sachs and Ares Capital, and one other $250 million settlement in March 2024 with Barclays and Waterfall Asset Administration.
Over the summer time, although, Volk mentioned it was changing into clear that the unit economics of Kyte’s enterprise didn’t at present work properly sufficient to generate free money stream in these markets. He mentioned his workforce explored promoting the enterprise at one level however determined to restructure as an alternative in favor of reaching profitability first.
That was solely going to be attainable if Kyte narrowed its focus, he mentioned, therefore the restructuring. Volk additionally mentioned that the corporate not too long ago accomplished a brand new fundraise to capitalize the restructured enterprise, however he mentioned he was not able to share how a lot.
The rental and subscription automotive service house has gone via laborious occasions not too long ago, particularly for firms that leaned closely into electrification.
Hertz mentioned in 2021 that it was going to purchase 100,000 Teslas to fill its rental fleet with electrical automobiles, however the firm wound up solely buying round 35,000. It offered nearly all of these earlier this yr. Autonomy, a startup created by TrueCar founder Scott Painter, fell far in need of its personal purpose to construct a fleet of 23,000 EVs; earlier this yr it introduced a pivot to promoting software program companies and information.
Regardless of the claims Kyte made in 2022, Volk mentioned his firm by no means received too deep within the means of filling its fleet with EVs — one thing that will have allowed the corporate to aim this restructuring in any respect. That “was excellent, retrospectively, that we didn’t lose a bunch of capital right here on residual values falling down,” he mentioned.
This story has been up to date with extra context about income and money stream in Kyte’s markets.
