Beepi, a year-old Silicon Valley startup that is truly making lemonade out of a lemon by matching used-car buyers and sellers for 9% of the deal has raised $60 million in Series B funding from venture capital firms by targeting Millennials “who first turn to their phones to solve problems and complete transactions, such as booking hotels on HotelTonight, ordering food via GrubHub or calling for a ride with Uber,” as Lizette Chapman reports in the Wall Street Journal.
As the legend goes, founders Owen Savir and Alejandro Resnik got the idea for the venture “after a used car dealer swindled” them with a clunker that “immediately started smoking,” Shiri Wasserman tells us on NoCamels.com. So they set out to create an online marketplace that, Savir says, “is all about making the experience of buying a used car fun, fast, and simple.”
Tall order, no?
“Beepi replaces the used car dealer and the used car lot with a system that connects buyers and sellers in a radical new way. No negotiating, no trips to the dealer, no surprises — and no commission to the guy with the plaid jacket,” according to the blurb for a promotional video on YouTube that seems to have gone antiviral — fewer than 500 views since it was published on May 1. “Which means a better price for everyone.”
As in sellers get more, buyers pay less and Beepi stays in business. How so? Well, they’ve come up with 10 reasons (click on “Pricing” and scroll down) that start with “no test-drives, no tire kicking, no scams, no flakes and no pain. We take all the hassle out of the system.”
Indeed, the Beepi website claims that “buyers pay lower than the average final sale prices at dealerships after negotiating. But at Beepi, there is no need to negotiate...we'll just give it to you!”
“Each vehicle's online ad comes with a product review, inspector's report and car history,” the Los Angeles Times’ Charles Fleming reported in a piece about the company last month. “The downside, for some prospective buyers: no test drives.” But there’s a three-month, 3,000-mile warranty and a 10-day, or 1,000-mile, no-questions-asked return policy, Fleming writes. And cars are delivered free to the buyers — if they live in California, at least for now.
The company, which is based in Los Altos, is “focused on perfecting the Beepi experience here in the Bay Area first, but fully plans to launch in more cities shortly,” according to a company fact sheet.
“Because we are a regional play and a national play, there is a buyer for every car,” Beepi COO Savir tells the WSJ’s Chapman. “We see demand from different cities and states and it’s easy for us to triangulate what they have and what they want. In Dallas they want the Ford 150 [trucks] and in San Francisco they like their Mini Coopers.”
“The new funding round, which was first reported by Re/code, comes from Foundation Capital and Sherpa Ventures, which join existing investors Redpoint Ventures, SherpaFoundry CEO Tina Sharkey, OLX founder Fabrice Grinda, IG Expansion co-founder Jose Marin, Homeaway co-founder Brian Sharples, former Loopnet CEO Rich Boyle, and Silicon Valley Bank,” Ryan Lawler reported on TechCrunch yesterday.
The investors, the WSJ’s Chapman reports, include the firms that have bankrolled Uber and LendingClub, which provides peer-to-peer loans.
“Companies like Beepi and Uber are really tapping into a generation that use their phone as a remote control” for what they want, Sherpa Ventures co-founder Shervin Pishevar, an early investor in San Francisco-based Uber, tells Chapman, who reports that Resnik intends to “tap Mr. Pishevar’s expertise to make Beepi a mobile-first company.”
Apps for both the iOS and Android mobile platforms are expected in the next six months.
In a blog post Monday, Savir and Resnik wrote about what it’s like to go from zero to 60 (million) so quickly. They attributed their success to two factors.
“The first is that we entered a market that was not just broken, but shattered,” comparing the current used-car process to having “more roadblocks and obstacles than you find in New York when the U.N. is in session.”
And then there’s the fact that “people are surprisingly and wonderfully open to new ideas,” they say, tipping their hats-in-hand to “Airbnb, Uber, and yes, eBay — for their role in creating a culture of trust that allows peer-to-peer marketplaces to grow and flourish.”