People seem to be comfortable buying an ever-growing number of things online, but are they ready to purchase their cars that way? Vroom says they are, and it’s making a couple of big deals to move forward with that vision.
The New York City-headquartered startup is announcing that it has raised $95 million in Series C funding, and it has also acquired competitor Texas Direct Auto.
Vroom allows people to buy and sell pre-owned cars from the web, with no-haggle prices, free delivery and a seven-day trial period. Texas Direct Auto is also an online car retailer (the largest on eBay Motors), and Vroom CEO Allon Bloch said it will continue to operate as a separate brand.
The combined company is expected see $900 million in revenue this year, with 500 employees.
“That’s quite significant, but in the scheme of half a trillion dollars worth of used cars bought every year, it’s two tiny fleas on the back of an elephant,” Bloch said. “This allows us to accelerate the growth. One thing is very clear to us — consumers are comfortable selling a car sight unseen, and buying a car sight unseen.”
Vroom already operates a reconditioning and fulfillment facility in Dallas, with plans to open another one in Indianapolis early next year — the company’s goal is to deliver cars across the country within 48 hours.
The acquisition will give Vroom an additional facility in Houston. Bloch said he was particularly impressed by Texas Direct Auto’s RFID technology and its “jewel in the crown” software that it uses to automate the process of reconditioning used cars for sale.
The Series C funding comes from investors including Catterton, General Catalyst, T. Rowe Price and Allen & Company.
It’s been less than six months since Vroom announced its $54 million Series B. Bloch explained that “the round is tied to the acquisition” — in other words, Vroom raised the Series C at least partly to fund the deal. He said the acquisition includes a combination of cash and equity and remains subject to regulatory approval (as does the funding).
Update: Vroom now says the deal has been approved by the Department of Justice. It also shared more details about the Series C, namely that it was led by Catterton, with participation from General Catalyst Partners, funds managed by T. Rowe Price Associates, Allen & Company, PICO Venture Partners, Bob Mylod and Priceline chairman Jeffery Boyd.