Beepi Lands $12.7 Million Investment

A few months ago, we reported that used-car marketplace Beepi Inc. was able to raise $60 million in funding from venture capital firms. Now, the company has landed a $12.7 million investment from two notable angel investors and more than 80 investors on the crowd-funding platform AngelList. The startup company says this move will help it swap out early backers for investors that can add strategic value to its development.

A total of $8 million was contributed by Yuri Milner, the Russian internet investor, along with the founder of the hedge fund SAB Capital, Scott Bommer. Some industry insiders see Milner’s involvement as a move to give his firm, DST, the potential to lead a large future investment in Beepi. An additional $2.7 million came from a syndicate of tech industry angel investors on AngelList organized by the early-stage investor Gil Penchina. This marks the largest investment made by an AngelList syndicate since the platform was founded in 2010.

According to Beepi CEO and co-founder, Alejandro Resnik, the entirety of the new investment will be used to buy out some of the company’s first backers, who provided investments of between $10,000-$15,000 each. “They are getting an amazing return on investment and understand this is the best for Beepi,” explained Resnik.

Beepi’s service allows car owners to enter basic information about a vehicle they want to sell, and then provides them with a quote that the company promises will always be higher than dealer trade-in prices. If the seller agrees to the quote that they receive, Beepi sends out its own inspector to clear the car for listing on its site. Importantly, if a buyer doesn’t purchase the car within a 30-day period, Beepi will buy the car itself. The company takes care of the paperwork and delivery in exchange for a share of the selling price.

It’s an interesting business model, but will customers actually want to buy cars from Beepi? Early-stage investor Gil Pechina is the former CEO of Wikia.com and a veteran of eBay, and he sees the potential for Beepi to gain popularity due to its focus on ensuring that buying and selling a car online is easy as well as by providing cheap transactions.

“I used to be at eBay and am well aware of how much friction there is in buying a car from eBay motors (I sold two there),” wrote Pechina. “Beepi takes that friction to zero.”

There is no question car dealers and auto marketers are resistant to a company such as Beepi, and it’s difficult to gauge just how popular the service will become. The company says that it currently delivers cars to 140 U.S. cities and gets more than 1,000 requests per week to sell cars from residents in the Bay Area alone.

“As a peer-to-peer marketplace, Beepi is all about connecting people. We wanted to do the same thing with our investor base,” said Resnik in a press release. “AngelList is a fantastic platform to engage with individual investors. We’re excited to enable new people to share in our growth.”