Vroom has raised $146 million in Series G funding, an expansion to a $30 million investment we reported in early September. U.S. automotive retailer AutoNation led the round for the startup, with participation from existing investors T. Rowe Price, L Catterton, General Catalyst and Fraser McCombs Capital.
The company declined to disclose the valuation, but says it was an up round. Vroom was valued at $440 million in 2016 with a $50 million financing, according to PitchBook.
Led by chief executive officer Paul Hennessy, the former CEO of Priceline.com, Vroom is an online platform for buying and selling refurbished, pre-owned cars. The company purchases used vehicles, then includes them in its online catalog, which currently lists just over 3,200 cars. Once it finds a buyer, it provides financing support through a number of lending partners, including CapitalOne and Ally, and delivers the vehicle directly to customers’ doorsteps in the U.S. To date, the company says it has sold 250,000 cars.
Founded in 2013, the company has raised $440 million in equity funding to date, but it hasn’t all been smooth sailing. Earlier this year, Vroom laid off roughly 30 percent of its staff after a futile attempt at building brick-and-mortar car dealerships. As a result, Vroom shut down its Dallas dealership, which was where most of the layoffs occurred, Hennessy said. Its Houston dealership is the only in-person effort still up and running.
“Clearly our investors were supportive of the strategic steps we took,” Hennessy told TechCrunch.
Since the layoffs, Vroom has been focused on building out its leadership team. Dave Jones, who spent over a decade at Penske Automotive Group, joined as the company’s chief financial officer; Mitch Berg, who was most recently the senior vice president of technology at dailymotion, was brought on as chief technology officer; and Dennis Looney, a veteran in supply chain management, was tapped as chief supply chain officer.
The infusion of capital is necessary for the five-year-old business, which operates in a capital-intensive industry. Carvana, perhaps its largest competitor in the space, raised $300 million in equity funding and hundreds of millions in debt before going public in 2017. Auto1, a German car trading platform, has raised more than $1 billion, including a significant investment from SoftBank’s Vision Fund earlier this year.
Other digitally native vehicle retailers have fallen on hard times despite venture backing. British startups Hellocar and Carspring both shut down in 2017, and Beepi, a Silicon Valley peer-to-peer used car marketplace, brought in $150 million in VC backing before going out of business last year. Vroom acquired some of Beepi’s software as the company went under.
Vroom’s decision to halt the operations of its physical dealership looks to have satisfied investors, but whether it’s built a sustainable business that can operate without a consistent influx of VC support remains to be seen.
Source: Tech Crunch Startups | Vroom nabs 6M from AutoNation, VCs for its used car site
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