Automotive deals pick up the pace this week led by CarGurus and CarOffer

Welcome to another edition of The Friday 5 with Steve Greenfield, Founder and CEO of Automotive Ventures, an auto technology advisory firm that helps entrepreneurs raise money and maximize the value of their companies.

Deal-making has really accelerated over this last part of the year, so let’s dig in and review what happened this past week. Let’s start by looking at the markets.

U.S. stocks sit near all-time highs, as we continue to receive positive news about combating the COVID-19 pandemic.

The U.K. began administering doses of the vaccine developed by Pfizer and Germany’s BioNTech, and Canada authorized the same vaccine for use north of the border.

Signs that lawmakers remain committed to finalizing a new COVID-19 relief package also gave the stock market a boost. Republican congressional leaders planned to talk with White House officials in an effort to advance the talks around a roughly $900 billion dollar COVID-19 aid deal.

Investors remain bullish about next year, pinning their hopes for further gains on a rebound in corporate earnings, as we emerge from the pandemic.

Let’s get to this week’s automotive technology transactions. As expected, we’re seeing a ton of investing activity as we close out the year.

CarGurus and CarOffer

The big news this week is that CarGurus has agreed to purchase a majority stake in CarOffer, the automated instant vehicle trade platform founded by serial entrepreneur Bruce Thompson, who launched the company in 2019. It seems like everything Bruce touches turns to gold.

We featured CarOffer two weeks ago as one of our companies to watch, and we guess we were right! The deal values CarOffer at $275 million dollars.

we’ve spoken numerous times about the blurring of lines between the retail and wholesale side of the used car business, and this move from CarGurus is going to continue to blur those lines.

Unlike traditional vehicle auctions which require manual bidding and vehicle evaluation, CarOffer enables buying dealers to create standing buy orders and provides instant offers to selling dealers. The company’s proprietary Buying Matrix technology automatically matches the buy orders to vehicle inventory, allowing sellers to simply accept an offer and check out.

Since its 2019 launch, CarOffer has experienced substantial growth, with more than 2,000 dealership rooftops installed. Fueled by the shortage of used car inventory this year due to Covid-19, the company processed over $350M dollars in merchandise and service transactions in the third quarter of 2020.

CarOffer is a clever business model that allows dealers to source used vehicles from other dealers’ inventory. Both sides bypass the traditional auction process.

With this acquisition, CarGurus has signaled that they are going to go deeper into dealers’ wallets by helping them with their used car sourcing and disposition strategy.

Manheim and ADESA parent KAR Global should be concerned that CarGurus is going to effectively start running B2B online auctions, and this should have implications for ACV Auctions’ upcoming IPO as well. Analysts will have questions about what this means to ACV, if CarGurus is now positioning itself as a competitor.

Kudos to CarGurus for making such a big, strategic move to help dealers with their used car strategy. And congratulations to Bruce Thompson and the CarOffer team for such a big exit!

Ridecell

This week, Ridecell, the mobility platform providing data insights and workflow automation for fleets, motor pools, trucking and logistics companies, has secured $45 million dollars for its Series C financing round from Fort Ross Ventures and Solasta Ventures.

COVID-19 has raised consumer and enterprise rental demand and increased the need for contactless reservation, entry, and drop off solutions. In recent months, leading government, corporate, trucking, and new-mobility fleets, including Penske, Toyota Sweden, Renault, and triple-A, have selected Ridecell to help them automate and digitize their services. Ridecell enables them to provide a safe driver experience and 24/7, self-service operations without retail staff or dedicated brick and mortar locations, significantly reducing both risk and operational expenses.

Shop-Ware

Shop-Ware, the SaaS platform for independent automotive shop management, has raised a $15 million dollar Series A round led by Insight Partners.

Shop-Ware helps auto-repair shops streamline operations both inside and out of the shop. Auto-repair shops are able to use Shop-Ware to track employee hours, inventory ordering and management, and integrate with third-party tools such as QuickBooks. Shop-Ware also helps the neighborhood auto-repair worker communicate and charge customers through text or a web-based interface.

Actasys

Actasys, who has created an automotive sensor cleaning system for autonomous vehicles, closed a $5 million dollar seed funding round led by Volvo Cars Tech Fund and Next Gear Ventures.

Actasys’ core technology, the ActaJet system, is an electronically controlled array of small actuator cartridges that generate strong jets of air without the need for rotary fans or compressors. The lead ActaJet product is for the cleaning and clearing of sensors on vehicles and smart mobility systems. Sensors, such as Lidar, cameras, and infrared sensors, require clear surfaces to ensure optimal operation and safety. Clean sensors enable achievement of higher levels of assisted driving and ultimately autonomous operation.

Innoviz Technologies

Innoviz Technologies, an Israeli startup focused on lidar and laser sensors used in autonomous vehicles, is in talks to go public through a merger with special-purpose acquisition company Collective Growth Corp. Collective Growth is seeking to raise $100 million to $350 million dollars in new equity to support a transaction that’s set to value the combined entity at $1 billion dollars or more.

Innoviz is a leading manufacturer of high-performance, solid-state LiDAR sensors and perception software that enable the mass-production of autonomous vehicles. Their InnovizPro product is a solid-state LiDAR that offers outstanding performance and value for automotive and other applications. Their InnovizOne product is a cutting-edge, automotive-grade LiDAR sensor that provides superior 3D sensing for Level 3 to Level 5 autonomous driving.

TuSimple

Self-driving trucks startup TuSimple has closed a $350 million dollar funding round led by VectoIQ.

TuSimple raised $55 million dollars in 2017 with plans to use those funds to scale up testing to two full truck fleets in China and the United States. By 2018, TuSimple began to test on public roads, beginning with a 120-mile highway stretch between Tucson and Phoenix and another segment in Shanghai. TuSimple has since expanded operations into Texas.

Canoo

Startup electric vehicle maker Canoo will reveal its first vehicle on Dec. 17th. Four days later, sponsors will vote on a $600 million dollar reverse merger with special purpose acquisition company Hennessy Capital Acquisition Corp 4.

With a valuation of $2.4 billion dollars, Canoo is the latest electric vehicle maker to take the SPAC route to public ownership. It follows battery-electric and fuel cell startup Nikola Motor Company, hybrid electric driveline producer Hyliion Holdings and electric pickup truck maker Lordstown Motors among others.

Canoo plans to launch a business-to-business last-mile cargo delivery vehicle in 2023. The company has not said where it will produce its vehicles.

Automotive Titling Company

Automotive Titling Company, the leading provider of out-of-state tax, title, and registration software, data, and services for the automotive industry, has received a strategic growth investment from the Polaris Growth Fund. Polaris is a software-focused, specialized affiliate fund of Polaris Partners, a Boston-based private investment firm with two decades of technology investing experience.

ATC was founded in 1972 and purchased by CEO Ken Alley in 1996. The Company offers technology-enabled full-service out-of-state Tax, Title, and Registration transaction processing services to dealerships as well as an API that integrates with online applications for any automotive ecosystem vendor. The Company has developed a proprietary database that contains 17 million unique Tax, Title and registration combinations covering all of the 10,000-plus tax jurisdictions in the U.S., making ATC the most comprehensive and only independent platform available.

Approximately 1,000 dealerships across the U.S. rely on ATC to process their out-of-state transactions throughout the country. ATC also seamlessly integrates this data with dozens of automotive ecosystem vendors, including digital dealerships and retailers, automotive credit providers, loan aggregators, and many others.

Congratulations to Ken & Marcus Alley, Automotive Titling Corporation and Polaris Partners!

L Catterton and CCMP Capital Advisors

L Catterton and CCMP Capital Advisors have entered into a definitive agreement to acquire a controlling interest in Truck Hero, the leading provider of functional aftermarket accessories for pickup trucks and Jeeps.

Founded in 2007, Truck Hero is the industry-leading innovator, manufacturer, and marketer of branded functional truck and Jeep accessories that enhance the experience for consumers’ daily activities and enthusiast lifestyles. The Company is recognized as a trusted partner to the dealer community for which it provides category-defining products and service, and it has established a leading online presence selling directly to consumers through RealTruck.com.

Swiftly

Swiftly, the leading big data platform for public transit, has received a strategic investment from JMI Equity, a growth equity firm focused on investing in leading software companies, with participation from Shakti Ventures.

Swiftly has created the first cloud-based big data platform specifically designed for public transit data and operations. Unlike legacy transit software, Swiftly leverages big data and sophisticated algorithms to drive reliable and efficient public transit, thereby improving the rider experience.

The public transit space is ripe for digital transformation. While this trend has been in full swing for at least a decade, only recently has public transit started to embrace modern digital solutions. The pandemic has accelerated the need for agencies to be agile and efficient, but by and large, agencies still rely on decades-old technology to keep millions of people moving through their cities.

finn.auto

finn.auto has closed a 20 million Euro Series A round to grow its car subscription service across Europe and the United States. Launched in late 2019, Finn.auto provides a range of subscription options with fixed monthly prices. Each vehicle includes insurance, maintenance, tires and access to round-the-clock emergency service.

Companies to Watch

We continue to highlight interesting companies in the automotive technology space to keep an eye on. If you read my monthly newsletter, I showcase a few companies each month, and we take the opportunity here on the Friday Five to share some of those companies each week with you.

Today, we’ll look at two very interesting automotive technology companies, Social Auto Transport and SureSale.

Social Auto Transport

Our first company to watch, Social Auto Transport, was founded in 2017 by Co-Founders Nick Mottas and Rob Newton, both of which have extensive vehicle logistics backgrounds.

Social Auto Transport provides an elegant, turnkey solution that automates the way dealers move cars for their customers – with total transparency for the client and limited liability for the dealership.

Dealers who use Social Auto Transport’s concierge services are experiencing a doubling of their repair order revenue. Concierge pick-up and delivery lets dealers please more customers and fill empty service bays.

89% of consumers say that a car maintenance service that picks up and drops off their car from any place at any time is appealing; and 67% say that they would switch to a brand that offers concierge pick-up and delivery. Social Auto Transport dealers more easily attract and retain retail customers while consistently increasing their RO size by 40% or more.

SureSale

Our second company to watch is SureSale, founded in 2017 by Jeffrey Schwartz, Donny Hall and Edward Routh, and located in Santa Monica, California.

SureSale has created what they call the “gold standard” for quality used vehicles and purchase protection.

Delivered through the industry’s first, and only, Certification-as-a-Service platform, SureSale bridges a major auto market gap, dramatically expanding the certified category and meeting the growing demand for Certified Pre-Owned vehicles amongst the US’s 40 million used car buyers.

SureSale’s certification and marketing platform, which is supported nationally by the SureSale brand, offers franchise and independent dealers across the US a turnkey program and technology that enables them to certify more of their used vehicle inventory.

Each SureSale Certified vehicle comes with a Comprehensive Auto Report, what they call the single source of truth on the past history, present condition and future assurance of a used car, as well as comprehensive warranty and purchase protection.

Did you miss last week’s episode of The Friday 5? Watch it here now! And don’t forget to share your questions and comments with Jim Fitzpatrick at jfitzpatrick@cbtnews.com.