A used-car marketplace site just scored the holy grail of the startup world: announcing a massive funding round of at least $300 million. Beepi, a California-based company that offers a secure platform for finding, buying, and selling used cars, declined to disclose the investors and said the round would be closing soon.
Both Beepi and Carvana revolve around similar business models to match used cars with buyers. The difference is in how they operate: Beepi’s model lets people sell cars to it online, while Carvana primarily acquires stock through auctions and vehicle trade-ins. But both companies, as well as competitors like Shift, offer hand-inspected cars, delivery to the customer’s door, extensive stock and car choices, and no-questions-asked return policies.
Ale Resnik, Beepi’s CEO, told Fast Company the funding would be used to begin operations in one new American city every week, and to scale the company up from 150 to 500 employees. The funding will also be used to ensure regulatory compliance in new markets, and for eventual international expansion.
The reason the used-car marketspace is so hot right now is an unusual culprit: Craigslist. When it came to national prominence at the beginning of the century, Craigslist disrupted traditional used-car marketplaces such as newspaper classifieds. But Craigslist has been slow to keep up with the mobile Internet age for a variety of reasons, and its smartphone-unfriendly interface (despite a plethora of unofficial Craigslist clients), along with a profusion of scammers, means more-agile services have been able to steal considerable market share. Now, it seems, investors are warming up to the possibilities of these sorts of sites.
Avi Steinlauf, the CEO of used car listing firm Edmunds (which competes with Beepi and Carvana by offering used-car advertisements from dealerships), said smartphone use has transformed the way people shop for cars. “All buyers are turning to mobile devices more and more, but we see especially higher engagement for used-car shopping on our mobile site,” Steinlauf told Fast Company in an email. “In fact, on our site, mobile users view the inventory of actual vehicles for sale nearby at rates that are at least 30 percent higher than their wired counterparts.”
The next challenge for Beepi is dealing with the thicket of regulations surrounding the used-car market in regional marketplaces. Resnik told Fast Company that Jim Messina, the influential political adviser, is working with his company. Messina also advises Uber and Airbnb.