This Startup Sparks Bidding Wars Among Dealerships for Your Used Car

Selling a car can be quite frustrating. While you might consider using services like Carvana for convenience, you could end up getting thousands less than your vehicle’s actual value. On the other hand, heading to a dealership could provide a better offer, but those bids can be erratic, along with the extra time and effort you’ll need to put in.

A Los Angeles-based startup called Bidbus has been paving the way over the last few years to combine the best elements of both options. This platform enables sellers to stay comfortably at home while receiving bids that rival those from dealerships. According to the founders, Bidbus has created a digital marketplace where multiple dealers can submit offers, often resulting in bids that are $2,000 to $3,000 more than what Carvana typically offers.

As it looks to expand beyond its initial California and Texas locations, the startup has successfully raised $15 million in a Series A funding round led by Ibex Investors, a fund concentrating on early-stage mobility. Other contributors included Mucker Capital, FJ Labs, Motley Fool Ventures, Data Point Capital, Walter Ventures, and Yossi Levi, recognized as the Car Dealership Guy.

Duke Yan, co-founder and CEO of Bidbus, told TechCrunch that his motivation came from personal experiences in buying and selling cars. After he encountered disappointingly low offers while helping his mother sell her car, he created a group chat for potential buyers. To his surprise, the bids began to rise.

“The problem with used car affordability is not related to financing but rather market efficiency. Consumers lack honest price discovery for trade-ins, dealers struggle to obtain quality inventory, and much of the best supply stays in people’s driveways,” Yan explained to TechCrunch.

It’s an intelligent approach. Dealerships traditionally acquire vehicles at auctions to replenish their stock, so the concept is not unfamiliar. Yan mentioned that Bidbus supports dealers by providing high-value used cars mostly from private sellers. The startup capitalizes on the difference between what online sellers are willing to pay and the typically higher offers made by dealers, which can significantly exceed thousands of dollars.

Yet, Yan wants to improve the selling experience beyond just maximizing seller profits. He aims to make the process enjoyable, drawing inspiration from stock-trading platforms like Robinhood and social media apps such as TikTok.

Once a vehicle is accepted on the platform, dealers have a limited time to place their bids. Bidbus showcases live offers in large font, making the bids easily visible. Yan envisions users sharing screenshots or videos of their experiences to enhance the app’s visibility and attract more sellers.

“We aspire to create a selling experience that is as transparent and competitive as stock trading, where prices are shaped by market competition rather than a single buyer,” Yan stated.

Scaling Bidbus has presented some hurdles, Yan noted. The company initially operated without external funding, and despite early success, he once had to remove one of the largest dealers from the platform.

“At that point, he was the only dealer buying numerous cars, which allowed him to negotiate down on offers,” Yan recounted. “It was a tough decision, but our platform is significantly enhanced now with several like-minded dealers who align with the quality experience we aim to provide our customers.”

Jeff Peters, a partner at Ibex who led the recent funding round, was initially hesitant to invest in Bidbus during its seed round, mainly due to its limited operations in Los Angeles. However, as Bidbus expanded to new markets and formed partnerships with dealership groups like Lithia Motors and Penske Automotive, he became eager to invest.

“This model appears scalable and addresses a prevalent issue, presenting a universal opportunity across the United States. Furthermore, it holds the potential for sustainability, as some of the most robust business models are marketplaces,” he told TechCrunch.

“Ultimately, they provide value to consumers by delivering an additional $2,000 to $3,000 for their vehicles while simultaneously allowing dealers to enhance their inventory and access previously untapped resources.”

So far, Bidbus has successfully facilitated the sale of around 10,000 vehicles on its platform. Peters remains optimistic about the future, noting that Carvana has shown that selling a car online can be efficient and uncomplicated. Now that vehicle owners are accustomed to this approach, “I believe they will actively seek the best available deals,” he concluded.