Just weeks after reports emerged that TrueCar was mulling an initial public offering, the Santa Monica company has announced that it raised $30 million from Paul Allen’s Vulcan Capital.
Abhishek Agrawal, who heads Vulcan’s growth equity investments, will join TrueCar’s board. The investment from the Palo Alto firm, which manages Allen’s billions, brings TrueCar’s total fund to more than $200 million since 2005.
Scott Painter, chief executive of the online automotive shopping service, said the financing would be used to fuel market expansion and product development.
“The Vulcan Capital investment supports TrueCar.com’s mission to bring truth and transparency to automotive retail and provides us with the capital necessary to grow the business and develop better products for consumers and dealers,” he said in a statement.
Bloomberg News reported earlier this month that TrueCar had retained investment banks Goldman Sachs Group Inc. and JP Morgan & Chase Co. and might file for an IPO in the first half of the year.
But in an interview with the New York Times announcing the latest funding, Painter denied those rumors, adding that while the company did business with investment banks, it does not have an IPO in the works.
TrueCar landed on the Business Journal’s list of Fastest Growing Private Companies this year with annual revenue of $82.4 million, up 116 percent from the previous year. The company has been on the list four consecutive years.
But there was a time when the future didn’t look as bright for TrueCar. Last year dealers across the country complained that the website forced them to cut prices. TrueCar retooled its business model to address those complaints. Rather than requiring dealers to bid against each other, the site now shows buyers the average price of each model.
TrueCar claims to have completed nearly 400,000 transactions this year with its network of nearly 7,000 car franchises and independent dealers.
“We believe TrueCar.com’s negotiation-free car buying platform has demonstrated significant traction in changing the way consumers behave in one of the largest segments of the economy,” Agrawal said in a statement. “Moreover, this remarkable business model has delivered huge value and significant savings to consumers.”
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