Goldman Sachs just poured millions into a startup that wants to make selling your car less annoying
Selling your car is annoying, especially if you want to sell to a person and not be ripped off by a dealer. It's about trust and money, and it's hard to have a transaction that doesn't make you miserable.
Venture capitalists have noticed and have started writing large checks to solve the problem. Online used car dealer Beepi has raised more than $79 million. New York-based online dealer Vroom most recently took in a $54 million round in July, raising its total to $108 million.
These aren't competitors says George Arison, CEO and founder of Shift.
The key to Shift's future, Arrison said, is the fact that the company doesn't own a single car. While Vroom and Beepi both buy the cars and then sell them online, Shift doesn't keep any inventory.
"We believe we can build the largest car company in the United States without actually owning any vehicle, similar to Airbnb having built the largest hotel company in the United States without owning any hotel rooms and Facebook owning the largest media company in the country without producing any content," Arison told Business Insider.
The company plans to announce today a $50 million Series B round led by Goldman Sachs, bringing its total to $73.8 million.
"For us, it's awesome to have this branch institution, that like you said, normally invests later, and come in and pick the winner early and pick the model early in the space," Arison said.
How it works
Shift works by taking over the selling process, making it easier for sellers, and working directly with the buyers.
Shift first dispatches a "car enthusiast" to a car owner's house to give it a quick inspection and a guaranteed price quote. If it sells above that, Shift splits the proceeds 50-50.
On the other side, Shift promises buyers a test-drive in 45 minutes or less. It also tracks the data on comparable cars in the area and presents it in a graph for transparency - getting rid of the dealer mark-ups, Arrison said. The car enthusiasts aren't paid on commission either, so there are no used car salesman tricks.
Right now, Shift only operates in San Francisco and Los Angeles, but it's planning on expanding to 20 cities by the end of 2016. That also goes for expanding their sales. Arrison said that the company plans to sell $150 million in gross merchandise value by the end of the year and cross the $1 billion mark in merchandise value next year.
This is just the beginning though, and one reason why Goldman Sachs invested so early. Shift is starting with one headache - the act of selling or buying a car - but it will work its way through all of the inconviences that come with car ownership.
"Shift isn't just about buying a car, it's about owning a car,"Arrison said. "Imagine a world in which one day Shift knows - if you let us know this - that it's time to change the oil, and a car enthusiast comes to your house or office, picks up the car, changes the oil, and drops it back off."