Selling a car is a pain. You can take the easy route and use services like Carvana, but you could end up with thousands of dollars less than your car is worth. Or, you could hope for more by going to a dealership, but the dealer’s offer can vary greatly depending on what they are you’re looking for, don’t mind the extra time and effort on your part.
He called a Los Angeles-based startup Bidbus has spent the last few years trying to combine the best of these options, so sellers don’t have to leave their couch to get dealership-level deals. The company has created a digital marketplace where multiple dealers can bid on a car, a process that results in an average bid that’s about $2,000 to $3,000 higher than what Carvana offers, according to Bidbus’ founders.
Now, looking to scale beyond its initial markets in California and Texas, the startup has raised a $15 million Series A funding round led by early-stage mobility fund Ibex Investors. Mucker Capital, FJ Labs, Motley Fool Ventures, Data Point Capital, Walter Ventures and Yossi Levi of Car Dealership Guy also participated in the round.
Bidbus co-founder and CEO Duke Yan told TechCrunch in an exclusive interview that he came up with the idea after years spent buying and selling cars on his own. When he tried to help his mom get rid of her car, the offers from the dealers were insultingly low, so he put them in a group chat. To his surprise, buyers began to raise the price.
“Used car affordability isn’t a financing problem. It’s a market efficiency problem. Consumers don’t have true price discovery to trade in, dealers struggle to source quality inventory, and much of the best deal is still trapped on people’s roads,” Yan told TechCrunch.
It’s a smart combination. Dealerships already buy cars at auctions to fill inventory, so the startup isn’t pitching a foreign concept. Yan said Bidbus helps dealers by bringing them the highest value used cars, which are usually sourced from private sellers. The startup takes advantage of the difference between what online sellers are willing to pay and what dealers typically pay higher: a difference that can run into the thousands of dollars.
But sellers netting more money, even after the Bidbus cut, wasn’t enough for Yan. He also wants to make the experience fun and has been inspired by stock trading apps like Robinhood and social media apps like TikTok.
Once a car is accepted on the platform, dealers only have a few hours to bid. Bidbus displays live bids with matching bids displayed in large font. The expectation, Yan said, is that Bidbus users will share screenshots or videos of this activity to increase awareness of the app and attract new potential sellers.
“Our vision is to make selling a car as transparent and competitive as trading a stock, where the price is determined by market competition rather than a single buyer,” Yan said.
Developing Bidbus was not easy, Yan said. The company was up and running, and while it had some early traction, it admitted it had to ban one of the platform’s biggest dealers.
“At the time, he was the only one buying that many cars, so he felt he could get away with bargains or lowballs,” Yan said. “At first it hurt, but now our platform is better than ever. We have five to eight more dealers like him, who are buying a lot, meeting the standards [experience] that we want our customers to experience”.
Jeff Peters, the Ibex partner who led the funding round, said he avoided investing in Bidbus’s seed round mainly because the company only operated in Los Angeles at the time. But once Bidbus started expanding into new markets, bringing in new customers and signing on dealer groups like Lithia Motors and Penske Automotive, Peters wanted in.
“It looks like this is scalable and that it’s a global problem and a global opportunity, at least across the United States. I think it’s also going to be resilient because some of the most resilient business models are marketplaces,” he told TechCrunch.
“At the end of the day, they provide value to consumers by giving them $2,000 to $3,000 more on their vehicle, as well as allowing dealers to build their inventory and access new inventory that they never had access to before.”
Bidbus has so far helped people sell about 10,000 cars on its platform, and Peters said he sees many positives. Carvana proved that selling a car online can be simple and fast, Peters said. Now that vehicle owners are used to the idea, “I think people are going to pretty much look for the best deal, however they can find it,” he added.
When you purchase through links in our articles, we may earn a small commission. This does not affect our editorial independence.
