In a sign of increased confidence in Vroom Inc.’s mission to bring used car sales online, the company announced Tuesday it has raised $50 million in Series E funding, and now looks to increase exposure to its brand and explore innovative leasing options.
Altimeter Capital Management LP and Foxhaven Asset Management LP are the latest investors joining L Catterton, General Catalyst Partners LLC, and Allen & Company Inc., bringing its total backing to $218 million since inception, with funds and accounts advised by T. Rowe Price Associates, Inc.
With the addition earlier this year of CEO Paul J. Hennessy, former priceline.com chief executive, the company sees a bright future ahead for online loan and leasing contacts.
“We’re not seeing adoption rate challenge because of online loans, that’s actually growing and is accepted very well,” Hennessy told Auto Finance News in advance of the announcement. “We need to move the world from an offline environment to online. That has an adoption curve and the good news is that adoption curve is accelerating.”
Hennessy said people are excited to finance a car online and not have to sit through the paperwork of a dealership in order to do so. The company’s 30 lenders are eager to sell to its customers, he adds. But the bigger issue is the social hurdle of convincing consumers to purchase a used car they haven’t seen in person and have it delivered to their driveway.
Hennessy notes that even with those adoption rate challenges, the company has still sold $1 billion worth of cars and he says consumers are warming up to the company’s seven-day home test drive period. The new round of funding will go directly to increasing the company’s brand awareness both online and offline, he says.
In terms of financing, Hennessy said the company is looking into various models for innovative loan and lease contracts. He wasn’t prepared to give details yet, but presumably creative solutions would address popular rideshare models and possibly electric vehicle battery leases.
“There is an opportunity in the leasing market and we are exploring how we would do that and what are the leasing requirements to get it done well,” Hennessy said. “That’s the one missing piece in our experience that we don’t have, so it shouldn’t be a surprise to anyone that we’re thinking hard about it.”
