Zipcar’s IPO a rarity for mission-driven companies
In all the coverage of Zipcar’s recent announcement that it’s planning to go public, one important point has been mostly ignored: This is not just any old IPO. This is an IPO of a not-only-for-profit–and that’s unusual.
Of course, whether it’s ultimately a positive–or wise–step for any mission-driven company isn’t clear, as the famed Ben & Jerry’s-Unilever experience showed. In that oft-discussed situation, after Ben & Jerry’s went public in 1985, it was forced to accept an acquisition offer from Unilever in 2000. That, ultimately, forced the company to backtrack on part of its social mission. It’s often referred to as a cautionary tale for social enterprises and one of the reasons behind the move to form a new corporate form, something I recently wrote about.
There are other potential hitches, as well. The Cambridge, Mass-based car-sharing pioneer filed for its $75 million IPO to take care of its mushrooming debt. In April, the company bought Streetcar, the UK’s largest car-sharing service; the deal reportedly was worth $50 million. But, while Zipcar has said that it sees great potential in the London consumer–it’s pretty much an ideal market for the company–the deal poses lots of challenges. It’s the first large-scale international acquisition for Zipcar. And UK antitrust regulators are still evaluating the merger.
Another pesky issue is profitability or lack of it. In fact, the company isn’t profitable and, not only that, expects a loss for 2010. In the three months that ended March 31, losses were $5.33 million compared to $2.97 million the year before.
And, there’s the matter of timing. The market for IPOs is uncertain at the moment. About one-third of IPOs planned in May were postponed or withdrawn, according to AP. The ones that stayed the course were deeply discounted.
Put it all together and you don’t see a recipe for great success. Still, if the move works, it will be more than an IPO of an unprofitable company with a lot of potential: It could spell a new chapter in the world of social enterprise.