WaiveCar
WaiveCar is a company started out of Santa Monica, CA, that has created a subscription service for electric vehicle rental. Subscribers would be able to rent an electric car for the first two hours for free and $5.99 for every hour after.
This service (and the first two hours of use) are supposed to be funded by a mobile advertising platform that the company is creating. Each car will carry a sticker of an advertiser and a video billboard with content determined by GPS location and advertisement demand. Additionally, the service is "subsidized" by the city of Santa Monica because electric cars can be parked at meters for free allowing for cost free parking and storage of all vehicles.
Cars can be driven outside of Santa Monica but must be dropped within the city on final return because of the parking subsidy.
In terms of exclusive features, the entrepreneurs have made an exclusive deal with the manufacturer of the screens that will be mounted on each car.
The service currently only has two advertisers and is not profitable at the time of the episode being filmed.
This deal aired on Episode 9.07.
Making A Deal
Each of the sharks seemed to express that the business was more of an advertising-sales play than a ride-sharing service that intended to compete with the majors like Uber or Lyft. Because of this, most of the sharks dropped out. But Mr. Wonderful offered to keep the deal alive by making the $500,000 a loan instead of a purchase of equity.
He proposed a $500,000 loan at 12% interest over a three year term. Additionally, he asked for a 2% equity "kicker" in return for the deal. Based on the way the the Stats Shark values these deals, this is seen as a $500,000 bite from the value of the company. Although, considering that WaiveCar came into the tank with an astonishing $25,000,000 valuation, this is merely a nibble.
In addition to the loan terms and the kicker though, Mr. Wonderful also receives access to any unsold inventory for 80% the list price for his own use. This would enable him to act as a reseller for the advertising space given the deep discount.
Analysis
Where should the Stats Shark start with analysis? Perhaps from the perspective that this deal is really kind of a dog? The business model seems unsustainable. An ad supported ride-sharing service? The ads would have to be priced at quite a markup to support just the maintenance of the vehicles and the vehicles would have to be located in extremely valuable places for the prices to be worth it.
Additionally, the "subsidy" by the city of Santa Monica is also unsustainable and will no doubt be eliminated in the near future. This is because, as many have come to see it, these electric vehicle benefits are essentially subsidies for the already rich given the price point of electric vehicles. The federal government is talking about doing away with the sales credit and many states already have or are thinking about eliminating their own tax credits for this very reason. Santa Monica will doubt do the same either soon because why should they subsidize the wealthy or why should they subsidize a business looking to take advantage of this?
If anyone is the winner here, it truly is Mr. Wonderful. Not only does he get his money back in thirty-six months with twelve percent interest but, on the off chance the company does succeed, he now owns two percent, and can sell ad space in Santa Monica, California, no doubt a valuable market for his Something Wonderful platform.