Used car marketplace Vroom has closed a whopping $146 million series G round of funding led by automotive retail giant AutoNation, with participation from “funds and accounts” advised by T. Rowe Price Associates, L Catterton, General Catalyst Partners, and Fraser McCombs Capital, as well as a bunch of individual investors.
Founded out of New York in 2013, Vroom serves as a platform for buying, selling, and trading in second-hand vehicles that are delivered direct to the buyer’s door. The company also offers financing services to help fund transactions.
Prior to now, Vroom had raised around $294 million, and with another $146 million in the bank, it said that it plans to “enhance key technologies and processes,” as well as build its customer base and make new hires.
“We are incredibly encouraged by this recent round of funding as investors, including those in the traditional auto retail space, continue to recognize that the Vroom model is the way of the future,” noted Vroom CEO Paul Hennessy.
The news comes nine months after Vroom laid off between 25-50 percent of its workforce, and ceased operations in Dallas and Indiana, before reports started to surface that Vroom was setting out to raise as much as $70 million in fresh funding. Given that the startup has now raised more than double that figure, this should position it well to compete with others in the space including San Francisco-based Shift, which recently raised $140 million in a round of funding led by automotive retailer Lithia — a deal reminiscent of Vroom’s latest raise.
Elsewhere, Phoenix-based Carvana raised nearly $1 billion in debt and equity funding ahead of its IPO last year, with its shares currently sitting at a little more than double its $15 IPO price.
Second-hand cars represent a $750 billion industry in the U.S. alone, and this is seemingly why investors are keen to get a piece of the used car marketplace pie.
“The fact that the largest auto retailer in the country is now backing Vroom speaks to the quality of the execution of the company’s management team and what we believe is the company’s ability to become much larger over time,” added Henry Ellenbogen, portfolio manager at T. Rowe Price Associates.