5 largest investments in auto finance startups in 2019

This year, investors funneled hundreds of millions of dollars into auto finance startups in the U.S. and across the Atlantic Ocean. The investment reinforces the value of — and need for —  innovative companies and fresh fintechs to propel the digital transformation of the auto finance industry. Here are the startups that secured the biggest funding rounds of the year, as reported by Auto Finance News.

Used-car leasing app Fair

Used-car leasing app Fair made waves in the industry this year with the announcement of several funding initiatives that pushed the startup’s total investment to more than $2 billion. The Santa Monica, Calif.-based company is backed by major financial institutions from around the world — Ally Financial, Mizuho Bank and SoftBank, to name a few — and inherited a Ford Motor Credit’s subscription service portfolio, Canvas, in September. Fair secured $600 million of investments this past year – $500 million backed by Mizuho and $100 million from Ally – dubbing it the company with the highest-priced funding.

The startup made an even bigger splash, however, when the company’s former Chief Executive Scott Painter announced a restructuring plan that would cut more than 40% of the startup’s workforce. Among the employees let go was Chief Financial Officer Tyler Painter, while CEO Scott Painter resigned the following week. Adam Hieber, operating partner of Fair investor SoftBank, took over as interim CEO.

Used-car retailer Vroom

Online used-car retailer Vroom secured $254 million in Series H funding, bringing the 6-year-old company’s funding total to $721 million. The e-commerce platform, which ropes in all phases of the vehicle buying and selling process, is partnered with lenders such as, Chase Auto, Capital One Auto Finance, Ally Financial, TD Auto and SunTrust Banks, which provide financing on the platform. Most recently, Vroom expanded its partnership with Chase Auto; the bank will become Vroom’s primary lender with the 2020 launch of Vroom Financial Services Powered by Chase.

Alternative lender Lendbuzz

Direct online auto lender Lendbuzz scored $150 million in debt and equity financing this year. The Boston-based company markets to thin- and no-credit borrowers that are “overlooked by the traditional credit system,” the company noted in a statement. The three-year-old startup leverages machine learning and data analytics to score borrowers who don’t have long credit histories in the U.S.

With the capital, Lendbuzz Chief Executive Amitay Kalmar said the startup will bolster its tech framework and grow the company’s footprint geographically.

U.K.-based marketplaces Cazoo and Motorway

Two London-based auto companies landed millions in funding this year, highlighting the potential for trans-Atlantic collaboration.

Used-car marketplace Cazoo scored $63 million from investors this year in two funding rounds — September’s round brought home $31 million in pre-launch funding, and in December, investors funneled another $32 million when the startup’s launched. Cazoo has raised more than $100 million in total funding.

Meanwhile, Cazoo competitor Motorway raised $13.9 million in a Series A funding round, bringing the company’s total funding to $17.4 million. The online used-car marketplace launched in 2017 and enables U.K. consumers to buy and sell used cars online. Since the beginning of 2018, Motorway has achieved $165 million worth of completed car sales, the company noted.

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