The car-subscription service buys used vehicles from dealerships and rents them via an app for a monthly fee
SoftBank Group Corp. has led a $385 million investment in auto-finance startup Fair, the latest bet by the Japanese firm to back companies that are trying to fundamentally change personal transportation.
The investment values the Santa Monica, Calif., company at more than $1 billion, according to a person familiar with the deal.
Fair Financial Corp. is a used car-subscription service, buying used vehicles from dealerships and essentially renting them through an app for a monthly fee. Customers can return the cars whenever they want with a five-day notice.
The company is betting that as mobility services, such as ride-hailing, become more popular, people will want access to vehicles of their choosing without getting locked into the hassles of car ownership, such as cumbersome leases or loans.
SoftBank’s money is coming directly from the firm, though the firm said it could transfer the stake to its nearly $100 billion tech-focused Vision Fund. SoftBank has spread its bets across the transportation sector, investing billions of dollars in ride-hailing services, such as Uber Technologies Inc., and taking a big stake in the autonomous vehicle unit of General Motors Co.
Uber and Fair have a close relationship. Earlier this year, Fair acquired the subprime auto-leasing business from Uber. The two companies have a deal that enables Uber drivers who need a car, and plan to drive for more than 30 days, to access Fair through the drivers’ version of the app. They can select a vehicle and make weekly payments with no longer-term contract. Rates are as little as $130 a week.
Those ties have helped fuel Fair’s growth in new cities where it must establish relationships with local dealers to buy cars. Fair arrives with the promise it will direct business from Uber drivers to these dealerships.
The latest funding round also includes money from venture-capital firms Exponential Ventures and G Squared, insurance company Munich Re ’s ERGO fund and Chinese investment fund CreditEase.
Founded in 2016, Fair had previously raised $115 million in equity funding over the past 12 months and almost $1 billion in debt. Fair said the new money will help it expand, including funding the acquisition of more vehicles.
The subscription car service is the latest digital car-buying venture of co-founder and Chief Executive Scott Painter, who took online car-buying firm TrueCar Inc . public in 2014. At Fair he is joined by co-founder and Chairman Georg Bauer, who as an executive at Daimler AG’s Mercedes-Benz and BMW AG , helped make popular the now widely used practice of lease sales for luxury cars in the U.S.
More than 20,000 vehicles have been acquired this way by Fair since launching the app in August 2017. The service is in 25 major U.S. cities, Mr. Painter said.
Write to Tim Higgins at Tim.Higgins@WSJ.com
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