Vroom, the online used-car platform headquartered in NYC’s Flatiron district, has raised $50 million in a Series E round, the company announced Tuesday.
The money will be used to resume a national expansion that was interrupted last year when Vroom acquired competitor Texas Auto Direct.
Unlike some competitors, which operate as online marketplaces, Vroom owns its inventory, which it buys at auction and puts through a vigorous reconditioning and safety program. The company plans to open an additional six refurbishing centers – it currently has two, both in Texas – to speed up local delivery.
“It’s a hub-and-spokes approach,” said CEO Paul Hennessy, the former head of Priceline.com who joined the company in June. “You shrink the last-mile distance.”
Vroom expects to top $1 billion in revenue this year, up from $900 million in 2015.
While those may seem like big numbers, they are a tiny fraction of the total used-car market, which Hennessy called “massively fragmented.”
Vroom’s closest competitor, Arizona-based Carvana, raised $160 million last month to broaden its own national expansion. The firm has outlets in a dozen cities around the country, including a Nashville store where customers can pick up their purchase from a coin-operated “vending machine” garage.