Automatic, a fintech startup, has raised more than $ 1 million from investors to serve the used car market. The startup connects hundreds of car dealerships with lenders.
The fintech startup business is using Wefunder to raise some of its funding. As of September, the company has raised more than $ 950,000 from 897 investors on the platform. In addition, the fintech startup has generated $ 361,000 in a parallel financing round. The current investment round values the startup at $ 24 million.
How Automatic works
The Automatic platform brings together car dealers and investors to finance auto loans. The business model emphasizes speed to finance loans. Connecticut’s fintech business aims to finance loans in less than twelve hours. The startup promises to reduce approval time by 87% and data entry time by 7% for auto loans. Until now, the company has focused on the independent dealer segment of the market. There are an estimated 45,000 used car dealerships in the United States (US). The business currently has 930 dealers on the platform.
Due to the focus on independent car dealerships, the fintech company does not serve car dealerships owned by the big three car companies – General Motors, Fiat Chrysler and Ford Motor Company – which are not on the platform at the moment. These larger auto companies may become significant competition for Automatic in the future. Detroit auto companies have recently shown their willingness to invest heavily in new technologies and startups, especially electric vehicles.
Rapid dealership growth
The fintech business is making rapid progress in registering new car dealerships on its platform. In July 2020, the fintech company had fewer than 100 dealers. By January 2021, the startup had more than 200 startups. As of July 2021, the fintech company had secured more than 800 dealers. The company’s commercial user base includes Brooklyn Motor Sports (Brooklyn, Connecticut), Center Motors (Manchester, Connecticut) and Airway Motors (Bridgeport, Connecticut).
According to the company’s 2020 financial statements, the fintech startup made approximately $ 32,000 in transaction fees last year, with a net loss of $ 53,000. In its first year of operation, Automatic processed more than $ 100 million in auto loans. Americans borrowed an average of $ 21,438 for used cars, according to LendingTree. On that average, Automatic has likely financed more than 4,600 auto loans.
The business had revenue per employee of $ 5,468 in 2020. That revenue per employee figure is relatively low compared to many startups. According to Sammy Abdullah, the average income per employee in publicly traded SaaS companies was $ 263,000. However, Automatic may end up with much better finances in 2021 because it is growing rapidly.
The team behind Automatic
The company’s leadership team has significant experience in the industry. Eric Burney, CEO and co-founder of the business, has over 18 years of auto loan experience. Before joining Automatic as a co-founder and CFO, Max Kane was a co-founder and CEO of AXP, a decentralized automotive marketplace. Alex Egan leads marketing at Automatic after serving as creative director at Sharestates, a private lender market startup. According to LinkedIn, the fintech company currently has nine employees.