TrueCar, “Groupon for Cars,” Raises $200M, Including Through Sharespost


TrueCar, a company that provides car-sales prices to consumers, has raised over $200 million in debt and equity financing to use for acquisitions and growth, the company said.

The transaction underscores continuing investor enthusiasm for companies that allow consumers to find good buys using the Internet. Daily-deals site Groupon has 115 million subscribers, although it is delaying its $750 million initial public offering.

“We are effectively Groupon for cars,” TrueCar chief executive officer Scott Painter told Reuters. He said it would be difficult for Groupon or any other site to replicate TrueCar’s business because of the complexity involved in collecting all the car-sales data that TrueCar provides.

TrueCar has raised about half its funds in debt and half in equity, Painter said.

Its new equity comes from backers including GR Match, McCombs Family Partners, and DealerTrack, Keating Capital, GSV Asset Management, Passport Capital, International Investment House and Allen & Company LLC.

The equity portion of TrueCar’s round was assembled using SharesPost’s private investor portal, marking the first time a company has raised primary capital via an online private company marketplace, according to Sharespost.

Silicon Valley Bank arranged the debt portion of the funding for TrueCar, which is based in Santa Monica, Calif.

In July 2010, TrueCar TrueCar raised $35.5M, including a $21.5M credit facility from Silicon Valley Bank. Participants in the financing also included USAA, Capricorn Investment Group, and GRP Partners. It raised its first round, of $2.8 million, in 2008, the year it was founded.

The company is gearing up for an initial public offering in the first half of next year, a person familiar with the matter told Reuters.

TrueCar.com allows consumers to check prices in their area for specific makes and models of cars. Its sister site, ClearBook.com, provides the same service for used cars.

Instead of relying on advertising for revenue, TrueCar takes a cut of the sale when its referral leads to a sale.

A spokesman declined to disclose revenue, but said TrueCar is profitable. Earlier this year, it acquired data-provider ALG, or Automotive Lease Guide, for an undisclosed sum. It also acquired Carperks, an automotive-purchasing and leasing company, for an undisclosed sum.

TrueCar also provides white-label online car purchasing services to partners such as credit card company American Express (AXP.N), car-services provider AAA and insurance-provider USAA. The company said it has driven 350,000 sales since its founding in 2005, including 20,000 last month.

By Reuters staff, with additional reporting by peHUB.

Do you want exclusive news and analysis about private equity deals, fundraising, top-quartile managers and more? Get your FREE trial to Buyouts! Or subscribe now!