A Vancouver tech company that got its start in auto financing before moving into auto sales has locked up $100 million in financing of its own.
Canada Drives Ltd., which shifted lanes last year from its fintech origins into online vehicle sales, revealed the close of the nine-figure funding round on Wednesday.
After expanding beyond B.C. and into Ontario back in May, founder and co-CEO Cody Green told BIV ahead of the funding announcement the company will be launching in Alberta in the coming weeks.
With the $100-million investment in hand, Canada Drives’ ultimate goal is to service 80% of Canadians and add 200 more workers over the next year to its current roster of 500 employees.
“We're just growing both our delivery fleet, the amount of cars we have and the new hiring push to help fuel that growth,” Green said, adding his company is hiring for more than 100 positions at the moment.
“Just seeing it resonate so quickly with Canadians is a pretty exciting thing to be a part of.”
The current supply of automobiles is low amid a global shortage of microchips — specifically small chips known as semiconductors needed for newer cars — while many drivers have been sitting on savings during the pandemic.
New car sales totalled 1,661,560 in 2020 — down 15.64% compared with a year earlier when 1,921,449 automobiles were sold, according to Statistics Canada.
But with fewer new cars sold over the past year (a trend extending back to 2018), fewer vehicles are being passed onto the used-car market, according to Green.
These conditions have made for a seller’s market within the used car space.
There’s no room for any haggling on the company’s platform, but once purchased, Canada Drives delivers the customer’s vehicle in a trailer within a day of sale.
Because Canada Drives does not rely on stocking inventory at dealership lots located at premium locations, the company’s overhead costs are lower than those of dealers.
Green said that’s allowed Canada Drives to maintain a higher level of inventory so that the supply issue hasn’t been throttling business, and prices can remain competitive.
“We hear a lot of what’s happened in the States,” Green said, referring to rising prices for used cars in the U.S. (Prices were up 23.6% last month in that country compared with the same month a year earlier, according to the Manheim Used Vehicle Value index).
“We definitely had a more muted version of that in Canada.”
The company has more than 1,000 vehicles for sale in B.C. and Ontario.
Meanwhile, its customer base has grown 50% month over month since expanding from the West Coast to Central Canada.
Funding was led by Honor Ventures with participation from KAR Global and “other strategic investors,” according to a release.
“The customer growth Canada Drives has seen in only a short amount of time makes it evident they’re providing a service that Canadians want,” said Honor Ventures founder Jeffrey Housenbold said in a statement.
He joins the Canada Drives board of directors as a result of the investment.