STREETCAR, the pay-as-you-go car-rental club, has raised £6.4m to help fund its expansion before a possible flotation, writes Matthew Goodman.

The company, which has more than 10,000 members, will use the financing from Smedvig Capital to increase the size of its fleet of Volkswagen Golf cars and to continue its growth outside London.

Car clubs such as Streetcar are becoming increasingly popular in large cities because they help to cut the expense of owning a car. Proponents of such schemes also argue that they are good for the environment because they reduce car use. Members are able to book a rental car in advance, with as little as half-an-hour’s notice, and use remotely activated smartcards to get access to the vehicle. They collect their car from a designated parking space near to where they live and drop it off in a dedicated space when they have finished with it.

Prices start from £4.95 an hour, with the cost of the first 30 miles of petrol included. A record of the journey is sent by text message to the club’s headquarters and members are sent a bill every month.

One estimate suggests that motorists who drive less than 6,000 miles a year could make an annual saving of up to £1,500 by joining a car club rather than owning their own vehicle.

Streetcar, which was founded in 2004, has become the market leader in London and has expanded to Brighton and Southampton. Owners Andrew Valentine and Brett Akker are considering taking it public before the end of this year.

Smedvig has invested in other transport-related companies, including ITIS Holdings, a provider of traffic data, and the car-leasing firm Tusker Direct.

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