ACV Auctions announced a $31 million round of Series C venture funding Tuesday that the company says will allow the online auto auction to double its footprint and expand coast-to-coast by year’s end.
With this latest round — which was led by led by Bessemer Venture Partners, Tribeca Ventures, SoftBank NY and Armory Square Ventures — ACV has now generated $53 million in funding since its founding.
ACV is currently available in 35 markets, said chief executive officer George Chamoun, but this expansion will bump that up to at least 70 by the end of 2018 as the company broadens its reach to the West Coast.
ACV also plans to use this round of funding to continue improving its technology and customer experience.
“Our goal is to bring trust and transparency to the wholesale vehicle market by providing dealers with an easy-to-use digital platform that saves them time, money and resources,” Chamoun said in a news release. “The additional funding will enable us to innovate on top of our existing platform while also fueling growth into new markets at a rapid rate.”
ACV said it is selling more than 1,000 cars per week. All listed cars are almost entirely from franchised dealers, with a few from rental car companies.
The company is currently in talks to expand the seller base to the commercial consignor community.
As for the buyer base, 60 percent are independent dealers and 40 percent are franchised, Chamoun said in a phone interview. A year ago, however, 99 percent were independents.
Bessemer partner Bob Goodman said in the release: “ACV Auctions has proven it can grow rapidly and meet the needs of thousands of dealers, while revolutionizing the wholesale experience. As venture investors, we double down on great teams and companies that have proven they can change an entire marketplace.”
‘Allows us to do even more’
ACV certainly has come a long way since its early days, which included winning the 43North startup competition in 2015.
ACV is now “a very well-resourced company,” Chamoun said in the phone interview, which gives them the ability to hire the top vehicle condition inspectors, territory managers, engineers and so forth — and do so at a rapid pace.
Chamoun emphasizes ACV already has a “fantastic team,” but this latest funding “allows us to do even more.”
In other words, it allows them the hiring capability necessary to expand as rapidly as they are.
Depending on the month, ACV is planning to open in between four to eight new markets a month as it expands outward toward the West Coast, Chamoun said.
“We’re funded to be able to hire away. And we’re able to get across the entire country. We’re funded now to go after all 150 markets,” he said. “We’ll be in at least 70 by the end of the year, likely a higher number.”
Advances to platform
As far as using the investment to advance the actual ACV product, Chamoun said those are designed to make it a “full-service” platform.
Take transportation, for instance. ACV is aiming to put the “technology and people and systems” in place so that when a buyer in Indianapolis needs the car shipped from the seller in Richmond, Va., the process is simple, Chamoun said.
In other words, you need the technology not just for the auction sale piece of the transaction, but the ancillary processes that come with the sale.
“The process of how our customers interact with ACV — everything from titles to payments to process — the interactions with our customers will become more and more digital and more and more easy (to use),” Chamoun said.
Investors drawn to online wholesale
Asked why the investment community appears to be attracted to companies like his that are in the online wholesale automotive space, Chamoun first points out the massive scope of the business: 20.5 million wholesale car sales a year.
He noted that “large investors like to invest in large marketplace opportunities.”
Secondly, he said, “the timing is well. It’s still one of those industries that (was) being done the older way.”
Chamoun later added: “Ecommerce, on the consumer’s perspective, is changing everything in the traditional world of retail. And in automotive wholesale, we still have a ways to go. We’re selling millions of cars digitally the way we’re selling it; but we still have a ways to go, so it’s a ripe opportunity — our investors know, No. 1, it’s a big market, and No. 2, it’s still a market that was ready to be disrupted.”