After cutting a big portion of its staff in March, Vroom is back pitching investors. Yesterday, the site for buying and selling used cars filed to raise $70 million in new equity funding.
Vroom has already secured $30 million of that $70 million target, signaling confidence from investors that it’ll become profitable and beat out key competitors in the space, like Carvana and Shift.
The startup wants to make the process of buying a used car as easy as ordering a pizza. With more than 3,000 cars for sale on the site, Vroom delivers directly to its customers’ doorsteps. Since it was founded in 2013, Vroom has brought in $320 million from General Catalyst, T. Rowe Price, Altimeter and others, reaching a valuation of $655 million in July 2017.
Vroom declined to comment on its upcoming round.
As part of the March layoffs, Vroom, which is headquartered in New York City, also shuttered its Dallas, Texas and Whitestown, Indiana locations. The official number of employees Vroom let go is unclear, though when news of the layoffs broke, the company listed 845 employees on its website. Today, the site list “600+” or about 30% fewer employees.
The cuts, the company said, were part of a restructuring that would allow Vroom to focus on profitability. This is what the company had to say in March:
“While Vroom’s business is healthy and financially stable, we’re always looking to align our resources to fulfill our long-term vision and deliver on our mission,” the statement said. “In sharpening our focus on profitability, we recently made some adjustments to our strategy that has impacted our headcount. While decisions like this are never easy, we are putting the company in a better position to become the leader in online car buying and continue to invest in future areas of growth.”
It’s not surprising Vroom is back in the fundraising game. Buying and selling cars is a capital-intensive business.
Vroom’s competitors have similarly raised a lot of capital. Carvana brought in more than $300 million in equity funding, as well as $400 million in debt, before hitting the stock markets in 2017. Shift has raised roughly $110 million to date. Beepi, a cautionary tale in the business of selling used cars online, landed $150 million in VC funding, then failed to sell its business twice, ultimately selling for parts to multiple buyers, including Vroom.