On Monday, Vroom, the largest online platform to sell pre-owned cars has secured $54 million in Series B funding round led by Catterton, General Catalyst Partnersand funds and accounts managed by T.Rowe Price Associates Inc along with individual participants like Jeffery Boyd, former CEO of The Priceline Group and Bob Mylod, former CFO of the same. The current funding has increased its total equity funding to date to $73 million.
Founded in 2013, the New York-based startup Vroom works to turn buying and selling cars into an enjoyable process by putting together technology with deep automotive industry acumen. It allows its customers to easily find impeccably refurbished, pre-owned cars at no-haggle prices below market value with the car delivery at their doorsteps for free. To be precise, it makes buying or selling car as quick and painless as ordering a Uber.
“We make it much easier for consumers to find the right car at below market price by removing fixed costs,” said Allon Bloch, CEO of Vroom. “We take great pride in the quality of our reconditioning and we specialize in low-mileage, recent year models with impeccable vehicle history reports.”
The startup allows 7-day money back guarantee, no questions asked return policy and a 90-day bumper-to-bumper warranty, combined with free shipping nationwide. It does not have competition in online car sales space till date.
The new funds would enable the company to complete the last mile of delivery. Currently, third-party services are needed to transport cars from its Dallas reconditioning facility to customers which the company is working to eliminate with the recent funding. It plans to add more vehicles of its own that are known as three-car haulers to its inventory. “This has the added benefit of having our people hand over the paperwork to the consumer and go over the car in person,” said CEO of Vroom, Allon Bloch.
Michael Farello, senior partner at Catterton said, “What attracted us to Vroom is the opportunity to transform a large industry that has been challenged to deliver great customer service.” He added, “Vroom is taking a hassle-free and transparent approach for car retailing and the proposition is resonating the consumers.”
With more than $20 million in sales in the May month alone, the company is on the right pathway to reach $300 million in sales in 2015. The company claims that it would continue month-over-month sales growth and will likely double up their number of employees to around 300 by the same time next year.
Adam Valkin, MD of General Catalyst said, “Most of the over $500 billion worth of used cars sold each year are advertised online, but very few involve end-to-end online transactions. Customers are demanding this more and more and Vroom is the emerging leader in this massive market.”
Mylod attributes the confidence of the customer in the company as one of the vital contributing factor in the investment decision. Mylod said, “We see parallels to the travel and real estate industries in Vroom’s model, particularly with its focus on consumer trust. I’m looking forward to joining the Vroom broad and helping the company continue to grow as the market leader in the online automotive space.”