SAN FRANCISCO — Drive Motors announced this week it raised $5.2 million in seed funding. The round was led by Bullpen Capital, with participation from existing investors Y Combinator, Khosla Ventures, Perkins Coie LLP, Emagen Entertainment Group, and others.
The startup offers an online checkout experience that integrates into dealerships websites and showroom. And since completing Y Combinator's incubator program in 2016, car orders funneling through its platform have grown to more 1,000 per month.
"We are excited to back Drive Motors as they have captured the elusive millennial car buyer for dealers, by selling cars the way Millennials like to buy — online with full information — and yet delivering twice the profit to dealers for the convenience," said Bullpen Capital general partner Duncan Davidson, who will join Drive Motors' board as part of his company's investment. "It's a great example of thinking outside the bubble, and leveraging the existing value of brick-and-mortar businesses rather than being disruptive for the sake of it."
Since launching online checkout for car dealers in 2016, Drive Motors has surpassed 1,000 car orders per month, and $250 million in annual order volume for its dealership customers. They include top-grossing dealerships from the largest dealership groups in the country, including Atlanta-based Fortune 500 company Asbury Automotive Group — one of Drive Motors' first customers. The retailer has since rolled out online checkout across its entire group of stores.
"It's always seemed odd to me that buying a new car is so incredibly complicated. It seems like something that should just work, once I've picked out what I want," said Aaron Harris, partner at Y Combinator. "Drive Motors is actually making that happen for the first time ever, and they're doing it in a way that actually aligns the dealers and the buyers. That's a big leap forward."
According to a recent survey from Drive Motors, which regularly analyzes data to inform the industry about car-shopping trends, nearly half of all online orders are placed between 5 p.m. and 10 a.m., nearly half of which are placed on mobile phones. Drive Motors has also observed that car buyers prefer to visit the dealership showroom as part of their research process, but prefer to make their purchase decision after-hours, from home.
According to company officials, the firm will use its new funding to expand its dealership network and develop more features to streamline the car-ownership experience.
"Ecommerce is rapidly becoming essential to top-grossing car dealerships, and this funding will allow Drive Motors to offer dealers of all sizes a full-stack solution that streamlines marketing, financing, contracting, servicing, and more," said Drive Motors founder and CEO Aaron Krane. "Frictionless ecommerce is a win-win for buyers and dealerships, alike."
Originally posted on F&I and Showroom