ZipCar Entrepreneurship Case Analysis: Financing & Founders

Introduction to ZipCar as an Entrepreneurial Venture

Being an entrepreneur is one of the most exciting paths a person can pursue, but it also involves a great deal of work. Many people overlook what it truly means to be an entrepreneur and do not clearly understand what it takes (Gartner, 2001). In the case of ZipCar, there are financing concerns that must be addressed, and there are relationship issues between the founders that also require careful consideration. By examining both of those areas, one can better assess the business model based on its initial results, determine where those running the company should go from this point, and understand how they should move forward in order to achieve success. A large part of entrepreneurship is trial and error, but it is important to have as strong an understanding of business as possible in order to have the best chance of succeeding (Mark & Mortensen, 2001).

The ZipCar Business Model and Initial Results

The initial results of the business model show that the shared-car concept is very successful in Europe. Danielson observed it in use there, was impressed, and brought the idea back to the United States. She then presented it to Chase, who was also encouraged by others to begin developing the ZipCar concept. Investors showed some interest, and the company was able to get started with a few cars and a few stations where those cars would be checked out and returned. Because of this early traction, and because the venture appeared to work well, the next step was for Chase to present ZipCar to larger investors who could help the company reach the next level — securing its future and enabling expansion throughout Boston and eventually to other cities across the U.S.

Carsharing as a concept had already demonstrated viability in Europe, which gave the founders a proven model to adapt for the American market rather than building entirely from scratch. This reduced some of the inherent risk of the venture and helped make the case to prospective investors.

Founder Relationship and Division of Responsibilities

The relationship between the founders is such that Chase handles most of the full-time work, while Danielson contributes on weekends and evenings. This arrangement works well because Chase does not hold a separate full-time position, whereas Danielson does. Chase and Danielson also divide their responsibilities according to their specific strengths. Danielson has automotive industry connections with Ford and other organizations, making her the best choice to build and develop those relationships. She also managed in-car technology and related operational issues.

Chase, on the other hand, has considerably more expertise in business and finance. She therefore focused on securing financing, creating the business plan, delivering presentations, and establishing a stable foundation for the company. This division of labor has paid off, and the venture appears poised for success if the necessary financing comes through and investors commit to the project. The complementary nature of their skill sets illustrates a broader principle in entrepreneurship: co-founders who cover each other's gaps are better positioned to build sustainable ventures.

Conclusion: Lessons from the ZipCar Case

Overall, ZipCar represents a strong entrepreneurial opportunity. Creativity is something that can be difficult to come by, and it is highly significant for any entrepreneur (Mark & Mortensen, 2001). It is, however, something that many aspiring entrepreneurs overlook — both during the planning stage and after they have already launched a venture and find themselves struggling without fully understanding why. They fail to recognize the value of creativity, and they underestimate how important it is to maintain a productive relationship with one's business partners and to secure the necessary financing before the venture is fully underway. Doing so allows a company to keep moving forward and ultimately achieve the kind of success that motivated the founders from the very beginning.

References

Gartner, W. B. (2001, Summer). Is there an elephant in entrepreneurship? Blind assumptions in theory development. Entrepreneurship Theory & Practice. Baylor University. 27–40.

Mark, B., & Mortensen, W. (2001). How creative does our innovation need to be? AIM Agenda, Australian Institute of Management.