After going through nearly $150 million in funding, peer-to-peer used-car marketplace Beepi.com is shifting gears. TechCrunch has learned and confirmed that the startup is shutting down its operations outside of California, laying off 180 staff, and merging its remaining business with Fair.com, a new venture co-founded by several car industry veterans that has yet to launch.
The reduced size will leave Beepi with 80 employees. They are being told about the fate of the company this morning.
TechCrunch understands that Beepi hit some bumps this year when one of its key strategic investors out of China decided that it wanted to pull out of the startup.
A Beepi spokesperson would not confirm which backer pulled out but we believe it is Chinese automaker SAIC, which was revealed as an investor earlier this year leading a $70 million round in December 2015. Pointedly, that round had originally been targeted for $300 million when Beepi first started to raise in May 2015.
We also have learned that Beepi also approached at least one competitor to try to sell itself.
“We’ve suspected that this may happen; in fact Beepi even approached us recently about buying their company,” wrote George Arison, co-founder and CEO of Beepi’s rival Shift, in an internal email to his staff shared with TechCrunch. Shift, which has raised $74 million, including a $50 million round from Goldman Sachs last year, has instead turned its attention to picking up customers in the wake of Beepi winding down its marketing and other business.
So into the vacuum came Fair. The still-stealth venture is fronted by Georg Bauer, formerly of BMW, Mercedes-Benz, and Tesla; Scott Painter, formerly of TrueCar; and Fedor Artiles, formerly of Mercedes-Benz, Chrysler, Volkswagen, and Tesla.
There are not many details yet of what the three plan to do with Fair, or when it will officially launch, but it’s fair to assume (sorry) that it will involve another go at the business of trading in cars with a very extended wrapper of customer service around that.
Fair’s site, as it is now, hints at a platform for people not to buy cars outright but instead move to a flexible leasing model and a car selector based on your finances. “Enjoy the freedom to drive the car you want for as long as you want,” it notes. “And when you’re ready, you can trade up, try something new, or just walk away.”
Beepi’s business, which never expanded outside the U.S. but had been live in some 16 markets before today, was based around the idea of users consigning their cars to the company, which would inspect and spruce them up, sell them online, and then deliver them to their new owners.
You may have seen the company’s distinctive bows across the hoods of the cars, if you’ve never used the service yourself. “Everyone gets a bow”, the company notes on its site. The cars would look practically new, but the prices were a huge drop on those of actually new vehicles.
In a way, however, the business of users cars is as old as cars itself, and it seems that what Beepi was doing was not as defensible as it hoped it would be. Other dealers soon also began offering the same perks, but with a far smaller cost base, since they would already have established, more localised businesses.
It will be interesting to see what kind of a twist Fair.com will put on this model and whether they can drive a business that Beepi could not. Ale Resnik, co-founder and CEO of Beepi, is staying on and believes that they will.
“Georg, Scott, and Fedor are auto industry veterans that I deeply admire, and I’m excited to join forces with them to focus on the future of the car-buying industry,” he said in a statement. “Beepi will benefit immeasurably from this partnership.”
Prior to this merger, Beepi had raised $149 million with other investors including Yuri Milner, Fabrice Grinda, Comerica and Foundation Capital, among some 35 others.
Updated with revised statement, comment from Shift, more detail of new business.