Vroom, an online startup retailer of pre-owned cars, has agreed to acquire Texas Direct Auto (TDA). The acquisition will be funded through a $95 million Series C equity round, and is subject to regulatory approval.
Vroom, based in New York and Dallas, was founded in 2013 by veteran AutoNation executives Marshall Chesrow, known as “the best used-car retailer in the country,” and Kevin Westfall, who were subsequently joined by experienced and prominent Israeli tech startup and venture capital veterans Allon Bloch and Elie Wurtman.
The company, formerly known as AutoAmerica until November 2014, previously raised $73 million in two equity funding rounds — the most recent $54 million in July 2015 — and $35 million in debt finance. Deep-pocket backers in these previous three rounds included notable institutional investors Catterton, Allen & Co., General Catalyst, and T. Rowe Price, as well as a group of private tycoons, including John Elway (a former auto dealerships owner, Pro-Football Hall of Fame quarterback and current GM and EVP for the Denver Broncos), Steve Berard (former CEO of AutoNation, and partner of Wayne Huizenga for three decades), Jeffery Boyd (chairman and former CEO of Priceline), and Bob Mylod (former vice-chairman and CFO of Priceline).
The new funding will support the TDA acquisition while allowing Vroom to accelerate growth and expedite delivery, with the goal of shipping cars to customers all over the country within just 48 hours of purchase. The company is opening a new 500,000 square foot facility near Indianapolis in early 2016.
The two brands will co-exist and continue to operate online separately. TDA was founded in 2002 and is based in Houston, Texas. As the number one retailer on eBay Motors, TDA is the pioneer in car retailing online.
The combined company, headquartered in New York, will now have 500 employees. The company will have auto reconditioning and fulfillment facilities in Dallas, Houston and Indianapolis. Each state-of-the-art facility is built from the ground up to impeccably recondition cars to a new industry standard – Vroom Supremely Certified. These facilities also serve as giant distribution centers, giving Vroom national reach to provide free coast-to-coast car delivery.
“We have always admired Texas Direct Auto’s capabilities and we’re excited to partner with them, especially considering their groundbreaking, RFID-led automated reconditioning process,” said Allon Bloch, co-founder and CEO of Vroom. “Their continued innovation has enabled the most technologically advanced used-car operation to grow to an enormous scale. Now, with Vroom, this combined scale gives customers an expanded inventory of low mileage, professionally reconditioned cars, at great prices.”
Allon Bloch bought his car from Vroom before he became its CEO and since then, he is convinced the world will be a better place if everyone’s car buying experience was just like his. To Bloch, Vroom is the significant seed of change in the painful car buying space, which is similar to the vision of previous companies he headed. He was co-CEO and president at Wix, a leading website publishing platform, and CEO and co-chairman at mySupermarket, a digital platform that empowers consumers to find the best prices for their groceries. He previously served for nearly seven years as general partner at Jerusalem Venture Partners.
“Texas Direct Auto has led online car retailing and their team shares our business spirit of making buying and selling cars online the smartest and easiest way to transact, with an experience that is transparent and fun,” added Vroom co-founder and chairman Elie Wurtman. “The continued investment in technology allows the combined company to tackle the operational complexity of making this vision a reality. Millions of people who want to sell their cars or purchase new ones will be able to do it in a more efficient and empowering way that’s as easy as any other e-commerce transaction.”
Elie Wurtman is championing Vroom’s ideal that people should be excited about car shopping, rather than dread it. He believes in customer joy. His pioneering spirit in the joy of people includes nJoy, the leading e-cigarette company as the chair of the board and his most recent personal project, the divine Bat Shlomo Vineyards. His portfolio of successful startups is vast, most notably IronSource and DeltaThree. He also previously served for nearly six years as general partner at Benchmark Capital’s Israel office.
“Joining forces with Vroom is a natural way for us to continue to grow Texas Direct Auto – both brands and companies will be run as separate entities and will leverage each other’s strengths,” said Rick Williams, co-founder of Texas Direct Auto. “We’re confident that this move will help us continue to be at the forefront of transforming the automotive industry.”
“We’re tremendously excited to be a part of the team at Vroom, the fastest-growing auto e-commerce company in the country,” added Texas Direct Auto co-founder Mike Welch. “They are as passionate as we are about changing the way cars are bought and sold online and providing the best end-to-end customer experience.”
Vroom enables customers to easily find impeccably refurbished, accident-free, low mileage cars at no-haggle prices below market value, with free delivery nationwide to their doorsteps. Vroom provides a 7-day money back guarantee, no questions asked return policy, and stands behind their cars with a 90-day bumper-to-bumper warranty. Vroom delivers superior customer service in addition to a superior car, at highly competitive prices. It eliminates all the hassle of the traditional way of buying, selling and financing cars, by putting the entire process online. By leveraging big data, Vroom provides customers with cash offers to purchase their cars sight unseen, in under five minutes, an industry first.
Vroom empowers customers all over the United States to save time, hassle and money by bringing all three aspects of the car buying process – buying, financing and selling – online in an easy, transparent and affordable way. Vroom offers thousands of high quality, refurbished, pre-owned vehicles with free delivery to customers’ doors nationwide.
Founded by serial tech entrepreneurs Mike Welch and Rick Williams, Texas Direct Auto has grown from a two-person startup in 2002 to the largest privately owned independent dealership in the United States. TDA leverages proprietary RFID tracking and prioritization software that provides the framework for selling thousands of vehicles per month to consumers, dealers and dealer networks around the globe. It operates out of a highly automated, 70-acre facility near Houston, Texas.