Fluid Truck’s Leadership Shakeup: Board Removes Co-Founding Siblings Over Fund Mismanagement Claims

Fluid Truck, an innovative startup targeted at revolutionizing the commercial vehicle rental sector, has seen a dramatic shift in leadership. Co-founders James Eberhard, who served as CEO, and Jenifer Snyder, the chief legal counsel, have been removed from their executive roles, sources close to the situation report. This change is characterized by some within the company as a forceful takeover, spearheaded by two board members representing minority investors. Despite these changes, Eberhard and Snyder have managed to maintain their positions on the board.

This major adjustment in the company’s governance, previously unreported, follows a period where Fluid Truck reportedly burned through tens of millions of dollars, leaving June 31st financials in the red and leading to unpaid bills to suppliers and fleet operators. These details have come to light through documents seen by TechCrunch and individuals directly informed on these matters. 

Despite multiple rounds of layoffs and extensive cost reduction efforts throughout 2023, the company—often likened to the Zipcar for commercial trucks—has been unable to rectify its financial woes.

The push against Eberhard and Snyder was instigated by Bison Capital and Ingka Investments, the venture arm of Ikea, both minority shareholders. Accusations flew from these investors regarding Eberhard’s financial mismanagement, which they argue led the company into significant operational deficits.

Eberhard was well-regarded for his positive intentions and kindness among current and former employees, yet many acknowledge his pivotal role in Fluid Truck’s financial challenges.

There’s a growing concern among employees that these investors may not prioritize the company’s best interests. This sentiment is partly based on a proposition for debt financing presented by Bison and Ingka in 2023, viewed by staff as unfavorable. Requests for anonymity were made by these employees, citing fears of backlash. Industry veterans have critiqued the term sheet as overly ambitious, suggesting a dwindling confidence in the ability of Eberhard and Snyder to navigate the company back to stability.

Scott Avila has since stepped in as the interim CEO, brought in by Paladin Management, a firm specialized in steering companies through fiscal, operational, and strategic downturns. Insiders say this transition has significantly altered the company atmosphere, shifting from a relaxed to a more formal and strained environment, a change witnessed firsthand by several individuals.

The timing complicates matters further, with Avila assuming leadership during the startup’s peak season.

While Eberhard directed inquiries to Fluid Truck’s media team, attempts to reach Snyder for comment were unsuccessful.

Fluid Truck has confirmed Avila’s interim leadership but remained tight-lipped regarding additional details sought by sources.

“We are earnestly tackling our present difficulties and actively seeking avenues to rehabilitate our financial standing and ensure a prosperous path forward for Fluid Truck,” stated the company via an email. “Throughout this significant transition, our dedication to our staff, [Fluid Vehicle Investor Program members], investors, suppliers, and clientele is steadfast.”

Bison and Ingka refrained from commenting on the term sheet or the assertions about their role in the leadership overhaul, providing statements that essentially disputed the premises of the inquiries.

“Bison Capital is committed to forging a brighter future for all stakeholders of the Company and vehemently contests the assertions your inquiries suggest, which indicate your sources might have offered you partial and flawed information,” stated Bison Capital via email.

Ingka responded in a similar vein.

“We categorically reject the assumptions underlying your questions, indicating that the information might be inaccurate, misrepresented, or out of context.”

All good plans go to waste 

Since its inception in 2016, Fluid Truck captured significant interest and capital by positioning itself uniquely at the convergence of asset management and Software as a Service (SaaS), amassing over $80 million in funding over two rounds and expanding across the U.S. and into Buenos Aires.

Notably, Fluid Truck, catering to top-tier clients like Amazon, UPS, and FedEx, introduced a forward-thinking strategy in 2018 to mitigate its asset burden and financial risks.

This strategy, dubbed the Fluid Vehicle Investor Program (FVIP), envisioned a model where individuals and smaller companies could acquire and rent out fleets of vans and trucks through the platform, with Fluid Truck overseeing the operations, allowing the fleet owners to accrue rental profits until the eventual sale of the fleet, managed by Fluid Truck, would provide them with a significant return.

Despite the model’s promising premise, a series of mismanaged insurance claims have left several FVIP participants awaiting payments for already sold vehicles, according to discussions with four asset owners under condition of anonymity.

Fluid Truck’s approach to insurance claims involved filing on behalf of the vehicle owners and covering repair costs upfront to facilitate quick returns to service, a procedure detailed in communications from Leo Amigoni, the COO, to FVIP members.

However, this method strained Fluid Truck’s financial reserves, creating a lag in recuperating expenses from insurance firms and resulting in substantial vendor payment delays.

With the company redirecting proceeds from vehicle sales to manage debts, the financial predicament deepened, as revealed to TechCrunch, with outstanding insurance claims nearing $9 million and additional substantial liabilities to vendors.

FVIP participants confirmed ongoing delays in receiving due payments from Fluid Truck, with some claims reaching into the hundreds of thousands.

Legal actions have been initiated against Fluid Truck, including a lawsuit by Cina Global in April 2021 for damages to its fleet, and a complaint from Van Go against Fluid Fleet, an entity of Fluid Truck, in September 2022, alleging breach of contract and inadequate maintenance and return of vehicles, resulting in significant financial detriment to Van Go.

Hostile takeover

Venture capital and startup ecosystems are rife with tales of power shifts and investor-founder disagreements. Such scenarios often stem from doubts about a founder’s leadership or clashes of personality between a founder and venture capitalists, prompting high-level corporate reshuffles.

In Fluid Truck’s case, Bison Capital’s leadership in a $63 million funding round in 2021, which Ingka Investments participated in, set the stage for later conflicts, despite neither holding a majority stake. The investors capitalized on the financial distress under Eberhard’s management to secure his exit in mid-July.

Although Fluid Truck faced serious liquidity issues, it achieved a notable milestone in 2023 by recording its first EBITDA profit of $3 million, with projections of reaching $60 million in revenue and maintaining EBITDA positivity by 2024. This financial progress, however, did not alleviate investor concerns about the existing

management’s capability.

The tension between Eberhard and Ingka and Bison investors was notably high, exacerbated by the company’s efforts to reduce expenditures. Despite reducing operational costs through multiple layoffs in 2023, liquidity challenges persisted. Faced with these difficulties, Bison and Ingka proposed a term sheet for additional funding, designed to offer Fluid Truck the crucial capital it needed but with stringent conditions that demanded significant concessions from Eberhard and Snyder.

Described by sources and industry observers as “aggressive,” the term sheet laid out a plan for $10 million in debt financing spread across three portions, demanding that Eberhard and Snyder step down from their roles and relinquish their shareholder voting rights. The terms included stringent repayment schedules and operational restructuring plans, indicating a forceful attempt to redirect the company’s trajectory while ensuring investor interests were safeguarded, possibly at the expense of other stakeholders.

Despite these pressures, Fluid Truck was scaling rapidly from its Denver base to 60 markets across the U.S. in just three years—a growth pace often encouraged and supported by venture capitals providing necessary capital. 

Eberhard declined the term sheet from Bison and Ingka, opting instead to pursue debt financing from Trinity Capital to alleviate Fluid Truck’s financial strain.

However, external pressures, including a downturn in wholesale used vehicle valuations exacerbated by Hertz’s bankruptcy filing in 2021, which flooded the market with commercial vehicles, complicated these efforts. The lack of matching equity investments to Trinity’s loan from Fluid’s shareholders led to the demise of the deal and eventually to the board’s decision to relieve Eberhard and Snyder of their duties.

Fluid Truck, Bison, and Ingka have not commented on plans to inject more capital into the company for stabilization. However, Ingka has expressed awareness of Fluid Truck’s ongoing challenges and reaffirmed its commitment to supporting the company through these trying times, emphasizing belief in its long-term growth and success potential.

Today, Fluid Truck navigates through turbulent waters under new yet inexperienced leadership, striving to overcome the financial hurdles that beleaguered Eberhard’s tenure.