Deal in focus: Mangrove drives CiteeCar growth

Founded in October 2012, CiteeCar currently operates 500 cars in Berlin, Hamburg, Munich and Frankfurt, and is run by a team of approximately 30 employees. Cars can be rented for €1 per hour for a minimum booking of 3 hours. "CiteeHosts" – people who give up their own parking space to the scheme and encourage their friends to join – are granted free usage.

Mangrove III Venture Fund, a €180m European-focused fund raised from institutional investors in the US and Europe, financed the round. CiteeCar is expected to see a two-digit run rate before the end of 2014.

Mangrove has been involved with CiteeCar since inception 18 months ago, providing seed funding to the company before opening it up to other investors. The initial investment took an unconventional approach, whereby Mangrove started the company and wholly owned it, before divesting part of its 100% stake to outside investor BScope, the direct investment arm of a European family office. The LPs behind BScope hail from the automobile industry.

The model seems to work for the early-stage VC, as partner Michael Jackson confirms: "It means the founders can spend the time building the business rather than focusing on obtaining seed funding. We basically pay the costs as if it were an internal project and then, once we think the company is ready, we take it to market. In this case the company has been valued quite favourably so we've taken the opportunity to raise capital."

The fresh capital will be used by CiteeCar to continue its expansion in cities in which it already has a presence – it aims to double its offering and have more than 1,000 vehicles in operation by the end of the year – and to extend its reach both in Germany and internationally, in cities that already possess good public transport links. "We have looked at England as an expansion area, but Germany is the centre of the European car industry and it works well there. We need to cater to demand and have had some ideas to add in two more cities – Düsseldorf being one, Mannheim being another – but we don't know just yet," says Jackson.

"What's important is that people can use this to get around when it suits them," he says. "This is just a complement to a city's existing public transport system, for those one or two occasions a month where you need a car to go to Ikea. The premise of the company is that there's going to be a car within walking distance of anybody who wants to use it; in an ideal world there'd be a CiteeCar on each street corner."

Urban mobility
Following March's smog disruption in Paris, where car owners were subject to driving restrictions, and recent 10/10 smog ratings in London, car-sharing schemes, electric cars and a greater emphasis on cycling are mooted as the way forward.

According to CiteeCar, industry analyst Frost & Sullivan predicts the number of Europeans using shared cars will rise to 15 million by 2020. "When we first got into this we were talking about how to make better cars, but the reality is that we don't need better cars, we just need better forms of transport," agrees Jackson. "It certainly has that scale that we would need."

In mid-April, High-Tech Gründerfonds got in on the action by investing in CarJump, a Berlin-based mobile app that aggregates information on car-sharing providers, enabling users to find their closest car and to directly book vehicles from various providers. CiteeCar is part of CarJump's offering.

People
Mangrove Capital Partners – Michael Jackson

Advisers
Equity – GP Bullhound (Corporate finance).

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• Topics
• DACH
• Consumer
• Expansion
• Germany