A venture capitalist explains why she backed Chariot shuttle service

Julie Lein (left) and
Clara Brenner are the cofounders and managing partners of Urban
Innovation Fund.
Urban Innovation
Fund

• One of the primary functions of a venture capitalist’s
  job is to spot the next big thing before it’s demonstrated any
  traction. If it sounds hard, that’s because it is.
• Clara Brenner, a seed-stage investor, placed an early
  bet on Chariot, the mini-bus shuttle service that Ford later
  acquired for $65 million. She told Business Insider that
  Chariot’s founder impressed her with one key move.
• Before he had the capital to launch a shuttle service,
  he put ads on sandwich boards in San Francisco, rented a van,
  and started driving people to work. People loved it.
• “We were just appalled and impressed by him at the same
  time,” Brenner said. “He said what he was going to do, and he
  did it.”

Clara Brenner is a pre-seed and seed-stage investor, which means
the companies she typically looks at are so premature, they might
not have a working product — let alone proof it has any traction.

So it’s noteworthy that in 2014, Brenner placed an early bet on
Chariot, the mini-bus
shuttle service that Ford later acquired for $65 million, while
the founder was still driving customers in a rented van and
advertising on sandwich boards he placed in San Francisco.

Brenner is cofounder of a young venture firm called Urban Innovation Fund,
which puts money into startups building the future of cities. She
said Chariot’s founder and former CEO Ali Vahabzadeh earned her
investment before the company had any buzz, because he
demonstrated momentum toward his goal every time they met.

“We met Ali, the founder of Chariot, through another company that
had gone through our accelerator that was also in the
transportation space. And they were like, ‘He’s crazy, he’s
awesome. You should just talk to him,'” Brenner told Business
Insider.

“At the time, he didn’t have anything. He was just like, ‘I think
we need a private van service in San Francisco.’ And we said,
‘OK, buddy, came back to us when you have something,'” she said.

That’s when Vahabzadeh did something that made Brenner and her
cofounder Julie Lein, who at the time ran a startup incubator
that was backed by the Blackstone Group, want to put down their
money.

“I want to say a week or two later, he came back and said, ‘I
rented a van. I’ve been driving it around the Marina'” — a ritzy
and remote neighborhood of San Francisco — “‘and people are just
loving it,'” Brenner remembers Vahabzadeh telling them.

One of Brenner’s friends was brave enough to ride with
Vahabzadeh, a complete stranger, after spotting his ads in the
Marina.

While it takes less than 20 minutes to ride in a car from the
Marina to the city’s downtown, commuters typically spend an hour
sitting on buses and waiting for connections if they take public
transit.

Riders, including Brenner’s friend, took to social media to say
how obsessed they were with Chariot’s service.

“We were just appalled and impressed by him at the same time,”
Brenner said. “He said what he was going to do, and he did it.”

“People loved it. He didn’t even have an app or any technology to
begin with. People were just appreciative of his time, his
respectfulness, the cleanliness [of the vehicles], and the fact
that it went where they wanted it to go,” Brenner went on. “We
were just really impressed that he clearly tapped into
something.”

When she’s evaluating a company for a possible investment,
Brenner said she considers how they like the founder and how
customers enjoy using their products or services. But before a
company earns its first dollar, she wants to see that it’s making
progress toward its long-term goals every time they meet.

“For us, it really is about a demonstration of momentum,” Brenner
said.

By the end of the year, Chariot
added a second route and was doing about 2,000 rides per
week. The company charged $4 a ride.

With more capital flowing in, Vahabzadeh added more rented vans
to the fleet, hired drivers, secured parking, built a website,
and started taking credit card payments through a smartphone app.

In 2015, Chariot reached a staggering
40,000 rides per month.

Chariot is Brenner’s most successful investment to date.
Ford bought the company for a rumored $65 million in 2016 and
has
shifted the business toward enterprise customers. In San
Francisco, employees at Glassdoor, Sephora, and other major
employers ride to work on pre-paid Chariot buses, according to
Brenner.

Chariot continues to run public and private routes in San
Francisco, as well as nine other major metropolitan areas across
the US.