Deals

In the face of strife, SideCar cruises on with investors riding shotgun

As debates over foreign policy and the state of the economy rage onscreen, another battle is sweeping our nation’s streets. Transportation agencies and alternative transportation networks are facing off, and venture capitalists at least, are hedging their bets with the startups.

Ridesharing company SideCar has announced raising $10 million in funding. This announcement comes just two days after news broke that the California Public Utilities Commission issued Cease & Desist orders to SideCar, Lyft and Zimride, stating that these businesses violate state laws.

These three ride-sharing apps, which connect private drivers with passengers via smartphones, are continuing to operate. The law prohibits transportation services and drivers from operating without proper consent, but the founders assert that the donation-based business model protects them against these charges. Uber, another popular car service, has also been locked in legal battles with regulatory agencies as it attempts roll out its service in new markets around the country.

The popularity and widespread adoption of these taxi alternatives make them a viable investment, even considering the sticky legal issues. Since launching earlier this year in San Francisco, SideCar has facilitated more than 50,000 rides and grown a community of hundreds of drivers and thousands of passengers.

The strong reactions from regulatory agencies and the fierce dedication of consumers frustrated with traditional taxi options are a clear sign that this industry is in a state of disruption.

This investment from Lightspeed Venture Partners and Google Ventures will support expansion into new markets, and according to CEO Sunil Paul will “accelerate the crowd-sourced transportation movement.”

To this effect, SideCar has also announced acquiring a US Patent that covers the company’s method for accepting passenger pickup requests, determining location, and dispatching vehicles to that location.

When the dust does clear and peer-to-peer transportation networks are the norm, these companies and their investors stand to benefit from being early voices to take a stand and deliver inexpensive, reliable, convenient rides. What a concept.