Uber has claimed its first major scalp, with San Francisco-based competitor Sidecar announcing on Tuesday that it will be shutting down operations at 2pm on New Year’s Eve.
Despite raising $35m of venture capital funding over its four years in existence, from investors including Richard Branson and influential VC Fred Wilson, the company has announced it cannot continue in its present form.
In a post on Medium announcing the shutdown, Sunil Paul, the company’s co-founder, laid some of the blame at the “significant capital disadvantage” Sidecar faced compared to competitors Uber (roughly $10bn raised) and Lyft (roughly $1.3bn raised). Those two companies are now seeking to raise a further $2bn and $1bn respectively, giving them the cash they need to push heavy subsidies in the race for market share.
Faced with that competition, Sidecar had already shied away from attacking Uber and Lyft head-on, instead focusing increasing attention on its delivery service. The underlying technology is similar (still requiring a driver to be paired up with something to move), but for a brief period the competition was less fierce. Now, though, Sidecar faces Uber on that turf too, with the company launching a second app, Uber Rush, to go alongside its core minicab business. And major US delivery startup Postmates has already raised four times the capital that Sidecar has managed.
The company leaves behind a legacy of innovation, and claims to have been the first to experiment with ridesharing, allowing non-professional drivers with their own cars to pick up passengers. Uber followed soon after.
Paul writes that “in the years that followed we launched a series of firsts, continually reinventing the category and making ridesharing safer, more convenient and affordable. We pivoted to a marketplace model where people could choose their ride and drivers set their own price. We were the first to introduce important innovations like Destination, turn-by-turn directions, Shared ETA, Shared Rides and Back-to-Back rides. Last February we launched Sidecar Deliveries and became the #1 business-to-business delivery service in the country in a matter of months.”
While it won’t be operating into 2016 as a delivery company, Paul says that Sidecar isn’t quite dead – instead, it’s going to “work on strategic alternatives and lay the groundwork for the next big thing”.
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