Fluid Truck, a startup that was founded to disrupt the commercial vehicle rental industry, has ousted its sibling co-founders – CEO James Eberhard and chief legal counsel Jenifer Snyder – according to sources familiar with the matter. The shakeup, which employees have described as a hostile takeover, was led by two minority investors on the board. Both Eberhard and Snyder have retained their own board seats.
The leadership restructuring, which hasn’t been reported previously, comes after the venture-backed Fluid Truck lost tens of millions of dollars as of June 31, leaving vendors and fleet owners unpaid, according to documents that TechCrunch has viewed and sources with direct knowledge.
It’s a hole that several rounds of layoffs and other cost-cutting measures taken in 2023 couldn’t fix for the company that’s been described as a Zipcar of commercial trucks.
The board’s decision to oust Eberhard and Snyder was driven by two minority shareholders, Bison Capital and Ingka Investments, which is Ikea’s venture arm. Sources familiar with the matter said the investors accused Eberhard of mismanaging the company’s funds and leading it into substantial operating losses.
Current and former employees separately described Eberhard as having good intentions and a kind nature, but agreed he played a large part in steering the company to a financial deficit.
Now, they’re worried these investors don’t have the company’s best interests at heart. They have pointed to a term sheet for a debt financing round that Bison and Ingka presented in 2023 as evidence of this misalignment. These employees requested anonymity from fear of retaliation. Industry experts say the term sheet presents as an aggressive lifeline, one that demonstrates a loss of faith in Eberhard and Snyder to reform the company.
In Eberhard’s place today is Scott Avila, a temporary CEO from Paladin Management, a company that guides businesses through challenging financial, operational and strategic transitions. Sources inside the company say this placement has furthered what they describe as an increasingly tense workplace environment at Fluid Truck – one that went from shorts and flip flops and casual banter, to executives in suits and a quiet office, according to sources who saw the transition firsthand.
To make matters more complicated, the interim CEO has taken the helm at the busiest season of the year for the startup.
When asked for comment, Eberhard told TechCrunch to reach out to Fluid Truck’s press contact. Snyder could not be reached.
Fluid Truck confirmed to TechCrunch that Avila has taken over as interim CEO, but declined to address numerous questions clarifying the information sources revealed.
“We are actively addressing our current challenges and pursuing every opportunity to restore our financial health and set Fluid Truck on a solid trajectory for the future,” the company said in an emailed statement. “As we navigate this pivotal transition, our commitment to our employees, [Fluid Vehicle Investor Program members], investors, vendors and customers remains unwavering.”
Bison and Ingka did not answer questions regarding the term sheet or address allegations they pushed the co-founders out of the company. They did respond with similar statements that repudiated TechCrunch’s questions.
“Bison Capital is focused on securing a better future for all the Company’s stakeholders and strongly disputes the premises of your questions, all of which indicate that your sources have provided you with incomplete and inaccurate information,” Bison Capital wrote in an emailed statement.
Ingka sent a statement with near identical language.
“We strongly refute the premise of your questions, which suggest that information is incomplete, based on misrepresentations and inaccuracies and has been taken out of context.”
All good plans go to waste
When Fluid Truck launched in 2016, the startup garnered plenty of attention and investment by offering a product that was one-part asset management, one-part software-as-a-service (SaaS). It raised more than $80 million across two rounds, and expanded across the United States and into Buenos Aires.
Fluid Truck, which boasts enterprise customers like Amazon, UPS and FedEx, came up with what seemed like a clever scheme in 2018 to make the business more asset-light and reduce its own risk and financial burden.
The startup introduced a program, called the Fluid Vehicle Investor Program (FVIP), that would allow individuals and small business owners to purchase fleets of vans and trucks, which could be rented out via the platformFluid Truck would manage the fleets on behalf of the vehicle owner, who would rake in rental income until they sold their fleets. The owner would then rely on the startup to sell the vehicles on their behalf, with the owner earning a lump sum payment for each vehicle sold.
In theory, this business model would be a win for everybody. But critical missteps, including mismanaged insurance claims, left many FVIP members waiting for payment on vehicles that Fluid Truck had already sold, according to four asset owners who spoke to TechCrunch under the condition of anonymity.
Anytime a driver was involved in a crash or a vehicle was damaged, Fluid Truck would file an insurance claim on behalf of the vehicle owner. Since insurance companies can take up to two years to reimburse claims, Fluid Truck would cover the repair costs to get FVIP vehicles back on the road quickly, according to several FVIP members and an email that Leo Amigoni, Fluid Truck’s chief operating officer, sent FVIP members.
That meant Fluid Truck was eating into its own cash reserves to pay out insurance claims; and it wasn’t getting money back from insurance companies fast enough to keep up with vendor payments.
Sources familiar with the matter told TechCrunch the financial hole grew substantially when the company’s management decided to appropriate the funds from vehicles sold toward its own debt to keep the business afloat.
Fluid Truck’s outstanding insurance claims today are around $9 million, according to information shared with TechCrunch. The company owes vendors millions, as well.
FVIP members who spoke to TechCrunch confirmed they’re awaiting payment from Fluid Truck after selling their vehicles, for which they’ve received bills of sale. While payment claims vary, some say they are owed hundreds of thousands of dollars.
One asset owner, Cina Global, sued Fluid Truck in April 2021 for damages to its fleet of 150 cargo vans, claiming to be owed $100,000. Another company called Van Go filed a complaint against Fluid Fleet (one of the company’s other entities) in September 2022, claiming a breach of contract and material non-performance. The company alleged that Fluid failed to properly maintain and repair its vehicles as promised and delayed decommissioning and returning Van Go’s fleet of vehicles, which resulted in the company incurring significant financial losses.
Hostile takeover
Power struggles between investors and startup founders are a tale as old as venture capital. It’s not uncommon to see a loss of faith in a founder’s abilities or personality clashes between a founder and VC lead to executive shakeups.
Bison Capital led Fluid’s 2021 fundraise of $63 million, a round that Ingka Investments participated in. Neither has a majority share in the company, according to a current employee, yet they were able to leverage Fluid Truck’s liquidity issues under Eberhard’s stewardship to push him out in mid-July.
Sources have pointed out that while Fluid Truck continued to experience a cash crunch, the company hit EBITDA profitability in 2023 for the first time at $3 million. Fluid is expected to hit close to $60 million in revenue in 2024, and also achieve EBITDA positivity. However, for investors, profits aren’t enough to instill confidence in management.
Sources said the tension between Eberhard and the investors at Ingka and Bison – Cees Aanahaanen for Ingka and Andreas Hildebrand and Doug Trussler for Bison – was palpable.
Pressure increased last year as the company tried to cut costs. While multiple rounds of layoffs in 2023 brought down Fluid Truck’s spending, the measures didn’t solve its liquidity issues. Bison and Ingka presented Eberhard and the company with a term sheet to invest more money into Fluid Truck, giving it the cash it desperately needed.
Sources and industry experts who have viewed the term sheet described the offer – which would have provided $10 million in debt financing over three tranches – as “aggressive.” The investors called for Eberhard and Snyder to resign from their executive positions and give up their voting rights as shareholders, according to the term sheet. The term sheet also would have required a cost reduction plan and for Fluid Truck to pay back more than $50 million within 36 months.
If the company was unable to generate substantial cash within a tight timeframe, it could have been forced to liquidate or further dilute equity. Meanwhile, the investors would have been protected, even at the expense of other shareholders.
In spite of its financial problems, Fluid Truck was scaling — a benchmark that some VCs encourage. The company went from operating solely in Denver to 60 U.S. markets in a span of three years. Typically, that kind of growth is rewarded by investors who provide the working capital to maintain, and even accelerate, it.
The term sheet from Bison and Ingka would have provided a lifeline, but it came at a cost to Eberhard and Snyder. So Eberhard turned down the offer and set about securing a debt financing round from Trinity Capital to help pay off Fluid’s debts.
External market factors got in the way. Valuations started to tank for wholesale used vehicles, particularly after rental car company Hertz filed for bankruptcy in 2021 and flooded the market with a large number of commercial vans and trucks.
And without the assurance that Fluid’s existing investors would match Trinity’s loan with equity, the deal fell through. On the back of this loss, the board voted to terminate Eberhard and Snyder.
Fluid Truck, Bison and Ingka did not respond to TechCrunch’s questions about whether they plan to invest more funds into the company to help it get back on track. Sources familiar with the matter say the investors have not offered to give Fluid Truck more capital.
Ingka told TechCrunch it is “aware of the current challenges faced by Fluid Truck, in which [they] hold a minority stake.” The VC said it remains “committed to supporting Fluid Truck during this time and believe[s] strongly in its potential for long-term growth and success.”
As it stands today, Fluid Truck has new management without direct experience in the company’s ways, and the company is still dealing with the same cash crunch it had when Eberhard was at the helm.
