Selling a car is painful. You can take the easy route and use services like Carvana, but you could be getting thousands of dollars less than what your car is worth. Or, you can hope for more by going to the dealer, but the dealer’s offer can vary greatly depending on what it is there are search, don’t worry more time and effort on your part.
A Los Angeles-based startup called Bidbus has spent the last few years trying to combine the best of those options, making it so that sellers don’t need to leave their couches to find sales-level offers. The company has created a digital marketplace where multiple sellers can bid on a car, a process that results in an average offer of about $2,000 to $3,000 more than what Carvana offers, according to Bidbus’ founders.
Now, as it looks to expand into its initial markets of California and Texas, the startup has raised $15 million in Series A funding led by venture capital fund Ibex Investors. The round also saw participation from Mucker Capital, FJ Labs, Motley Fool Ventures, DataPoint Capital, Walter Ventures, and Yossi Levi of Car Dealership Guy.
Bidbus founder and CEO Duke Yan told TechCrunch in an exclusive interview that he came up with the idea after spending years buying and selling cars on his own. When he tried to help his mother get rid of her car, the offers from the dealers were ridiculously low, so he put them in a group discussion. He was surprised when buyers started asking prices.
“Used car affordability isn’t a financial problem. It’s a market efficiency problem. Buyers aren’t getting real trade-in prices, dealers are struggling to find quality inventory, and many of the best deals are still stuck on people’s streets,” Yan told TechCrunch.
It’s a clever combination. Dealers are already buying cars at auctions to replenish inventory, so startups don’t outsource the idea. Yan said Bidbus helps dealers by bringing them more expensive used cars, which are often from independent dealers. The startup takes advantage of the spread between what online merchants are willing to pay and the typical merchant’s highest fee: a difference that can reach thousands of dollars.
But getting the sellers more money, even after Bidbus was cut short, wasn’t enough for Yan. You also want to make the experience fun, and take inspiration from stock trading apps like Robinhood and social media apps like TikTok.
Once the car is accepted on the platform, sellers have only a few hours to bid. Bidbus displays live bids and matching offers displayed in large font. The expectation, Yan said, is for Bidbus users to share screenshots or videos of the activity to raise awareness of the app and attract new potential buyers.
“Our vision is to make car sales as transparent and competitive as stock trading, where the price is determined by market competition instead of a single buyer,” said Yan.
Growing Bidbus has not been easy, says Yan. The company was bootstrapped in the beginning, and when it was up and running, he admitted he had to block one of the platform’s biggest vendors.
“At that time, he was the only one who bought a lot of cars, so he felt he could get away with being robbed or run over,” Yan said. “It was painful at first, but now our platform is better than before. We have five to eight other sellers like him, who are buying more, raising the bar.” [experience] what we want our customers to go through.”
Jeff Peters, a partner at Ibex who led the funding round, said that he was personally involved in seeding Bidbus mainly because the company was only operating in Los Angeles at the time. But when Bidbus began expanding into new markets, bringing in new customers, and signing up dealer groups like Lithia Motors and Penske Automotive, Peters wanted in.
“It seems like this is a risk, and that it’s a universal problem and a common opportunity, at least across the United States. I think it’s going to last a long time, too, because some of the longest-lasting business models are markets,” he told TechCrunch.
“At the end of the day, they’re providing value to consumers by giving them $2,000 to $3,000 more for their vehicle, as well as allowing dealers to build their own inventory and access new inventory that they never had access to before.”
Bidbus has so far helped people sell about 10,000 cars on its platform, and Peters said he sees a lot of things going wrong. Carvana has proven that selling a car online can be easy and fast, Peters said. Now that car owners are used to that idea, “I think people will want to buy the best, but they can get it,” he added.
If you shop through links in our articles, we may earn a small commission. This does not affect our editorial independence.
