Fair to Close Funding Round, Secures Offers for Nearly $1 Billion in Capital

Fair — a used-car, no-commitment leasing app — is closing a strategic funding round for an undisclosed amount and has additionally secured offers for nearly $1 billion in capital from a group of institutional investment banks, the company announced today.

The funding round was led by BMW i Ventures, and includes investments from other strategic investors such as Penske Automotive Group, according to a company press release.

Fair’s flexible-ownership solution offers a “strategic investment opportunity for manufacturers like BMW,” because the model can benefit dealers like Penske Automotive Group as well as customers, according to the release.

“The Fair model relies on dealers as ongoing operational partners, which is why it made sense as an investment for Penske,” Scott Painter, Fair’s co-founder and chief executive, said in the release. “Penske’s physical infrastructure will serve as a foundation to enable Fair’s flexible model.”

Separately, Fair secured $1 billion in capital from a group of undisclosed investment banks that traditionally back auto debt portfolios. The secured offer comes from an entity led by Sherpa Capital that is being set up to fund innovative transportation models like flexible ownership and ridesharing, according to the release.

Fair, which launched in early September, allows customers to shop for a car based on a prequalified monthly payment range tailored to the borrower’s budget, and includes the flexibility to walk away from the vehicle with only five days’ notice.

Unlike a traditional loan or lease, “We are not trying to qualify consumers based on their credit score; we are using their affordability index to determine how much they can afford to pay,” Painter told Auto Finance News back in September. “We then also benchmark what folks like Dealertrack and other platforms would put the consumer into with an indirect loan. … We are actually doing the math behind the scenes on what you would be able to finance for the car you are looking for, down to the monthly payment, and we give a guarantee.”

Fair is available in the greater Los Angeles area and will be rolling out to the rest of California by yearend. The startup also plans to expand to other select markets across the U.S. — likely starting with Texas and Midwestern states — in 2018, Georg Bauer, Fair’s co-founder and president, previously told AFN.

“In addition to Fair’s obvious benefit for customers, we believe our app will be a critical tool for dealers handling the rising flow of high-quality lease returns we expect over the next several years,” Bauer said in the release. “Enabling this process with digital capabilities creates an amazing opportunity for consumers, and helps build brand loyalty for automotive brands.”

Bauer will present a session entitled “The Mobile Landscape in Big Auto” at the 17th annual Auto Finance Summit, which will take place Oct. 25-27 at the Wynn Las Vegas. In Bauer’s session, he will offer an overview of traditional auto finance consumer best practices, how auto finance success limits incentive for mobile innovation, and provide examples of incremental digital offerings — and why the future demands more.

Other sessions at AFS include: Economic Trends in Auto Finance, Practical Compliance Lessons, Strategies for Enhanced Dealer Relationships, and Default Management: Strategy & Methodology.