Used car marketplace Vroom nabs $254M to take its growth up a gear

There have been a lot of bumps in the road for startups building used-car marketplaces, but now one of the longer-standing of them has closed a major round of funding: a clear sign of the mileage left in this category. Vroom today is announcing that it has raised $254 million, a Series H that it plans to use to keep scaling the business, and specifically also to expand a product and engineering hub based out of Detroit.

The company’s platform has to date been used by more than 250,000 buyers and sellers, according to the company. It has some 3,000 vehicles listed at any time, covering some 400 makes and models. The Detroit hub opened in August 2019 and is a symbolic as well as practical location: it’s the center of the US automotive industry, making it a prime place for Vroom to recruit talent and build inroads in with carmakers and others.

This latest round of funding is being led by Durable Capital Partners LP, with participation also from funds advised by T. Rowe Price Associates, L Catterton and others that are not being named.

Vroom declined to comment on its valuation. For some context, it last raised money almost exactly one year ago, $146 million, which came in at a post-money valuation of $796 million, according to PitchBook. It’s not clear how much it has grown in the last year (we’re asking).

Vroom has now raised a total of $721 million since it launched in 2013. Previous investors have also included General Catalyst, Altimeter Capital and Allen & Co.

Vroom is led by former Priceline.com CEO Paul Hennessy, and the plan is to use the injection of capital to hire more employees, particularly for product and engineering jobs. Vroom said it expects in 2020 to “significantly increase” staff at its Detroit office.

“This new round of funding provides the necessary resources to further grow and scale our business,”  Hennessy said in a statement. “We are thrilled to receive continued support from investors and partners, reinforcing the Vroom model as a tremendous opportunity to bring about a fundamental and enduring change in the used vehicle industry.”

Indeed, more funding is critical in what is a capitally intensive business, and for Vroom itself, it’s a sign of how its restructuring appears to be paying off. Back in 2018, Vroom laid off about 30% of its staff after a failed attempt at building brick-and-mortar car dealerships, amid a time when we were seeing several other problems hit its competitors.

Vroom has focused its efforts since the layoffs on building out its leadership team. Vroom has added several executives in recent months, including Dave Jones, who spent over a decade at Penske Automotive Group and recently joined as its chief financial officer.

The lead investor here is notable. Durable Capital Partners is the new fund led by former star T. Rowe Price portfolio manager Henry Ellenbogen, and the firm has now started investing in earnest. This is the second investment its made in the wider transportation category, after taking part in a $400 million round for Convoy. It’s also invested in a fintech startup, Rapyd, which is moving into logistics now. All three of these investments have been announced in the space of a month.

Ellerbogen first became familiar with the company because T. Rowe Price made an investment in 2015.

“I’ve worked with the Vroom team for years and I’m pleased to announce that it is one of the first companies that my new firm is investing in,” he said in a statement. “We’re very excited to be a part of the future of automotive retail and support Vroom in its efforts to move the car buying and selling process online for consumers across the country.”

Vroom was part of a wave of online used marketplace startups that launched about seven years ago. Several of these companies have shuttered, while others such as Shift and Carvana have survived and even scaled.

Carvana became a public company in 2017 and its market cap is currently around $13 billion. In the meantime, others have waded into the field with alternative business models, such as Fair.com and its approach of “flexible” car ownership that looks similar to leasing (and these new players have faced their own challenges).

The center of Vroom’s business is an e-commerce platform that handles the entire transaction for buyers and sellers of used vehicles.

Vroom’s platform gives customers who want to sell or trade in their vehicles real-time appraisals, loan payoffs and at-home vehicle pickup. The company reconditions the vehicles it takes possession of and then includes them on its online catalog.

Buyers can get financing through a number of lending partners that Vroom has partnered with, including CapitalOne, Ally and more recently Chase. Once the sale is complete, Vroom delivers the vehicle directly to customers’ doorsteps in the U.S.

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Netflix earmarks $420M to fight Disney in India

Netflix may still not have a million subscribers in India, but it continues to invest big bucks in the nation, where Disney’s Hotstar currently dominates the video streaming market.

Reed Hastings, the chief executive of Netflix, said on Friday that the company is on track to spend 30,000 million Indian rupees, or $420.5 million, on producing and licensing content in India this year and the next.

“This year and next year, we plan to spend about Rs 3,000 crores developing and licensing content and you will start to see a lot of stuff hit the screens,” he said at a conference in New Delhi.

The rare revelation today has quickly become the talk of the town. “This is significantly higher than what we have invested in content over the past years,” an executive at one of the top five rival services told TechCrunch. Another industry source said that no streaming service in India is spending anything close to that figure on just content.

While it remains unclear exactly how much capital other streaming services are pouring on content, a recent KPMG report estimated that Hotstar was spending about $17 million on producing seven original shows this year, while Eros Now had pumped about $50 million into its India business to create 100 new original shows. (The report does not talk about licensing content expenses.)

Netflix, which entered India as part of its global expansion to more than 200 nations and territories in early 2016, has so far produced more than two dozen original shows and movies in the country and inked partnerships with a number of local studios including actor Shah Rukh Khan’s Red Chillies Entertainment.

Hastings said several of the shows that the company has produced in India, including A-listed cast starring thriller “Sacred Games” and animated show “Mightly Little Bheem” have “travelled around the world.” More than 27 million households outside of India, said Hastings, have started to watch “Mighty Little Bheem,” a show aimed at children.

Netflix, which is expected to spend about $15 billion on content globally next year, has never shared the number of subscribers it has in India. (It has over 158 million subscribers globally.) But the company’s financials in the country, where it employs about 100 people, have improved in recent quarters. In the financial year that ended in March, the company posted a revenue of $65 million and profit of about $720,000 for its India business.

The big, big, big Indian market

India has emerged as one of the last great growth markets for global technology and entertainment firms. About half of the nation’s 1.3 billion population is now online and the country’s on-demand video market is expected to grow to $5 billion in next four years, according to Boston Consulting Group.

But the propensity — or the capacity — of most of these internet users to pay for a subscription service remains significantly low. Most services operating in India today make vast majority of their revenue from ads. And others are making some changes to their model, too.

To broaden its reach in the nation, Netflix earlier this year introduced a new monthly price tier — $2.8 — that allows users in India to watch the streaming service in standard quality on a mobile device. (The company has since expanded this offering to Malaysia.)

Netflix competes with more than three dozen on-demand video streaming services in India. Chief among its competitors in the nation is Disney’s Hotstar. Hotstar’s content bouquet includes live TV channels, streaming of sports events, and thousands of movies and shows, many syndicated from global networks and studios such as HBO and Showtime.

The ad-supported service offers more than 80% of its catalog at no charge to users and charges 999 Indian rupees ($14) a year for its premium tier.

Among the licensed content that Hotstar — or its operator Star India — own in the country include rights to stream a number of cricket tournaments. Cricket is incredibly popular in India and has helped Hotstar set global streaming records.

In May this year, Hotstar reported that more than 25 million people simultaneously watched a cricket match on the platform  — a global record. The service, at the time, had more than 300 million monthly active users.

Commenting on the competition, Hastings said the next five to 10 years is going to be “the golden age of television” as “unbelievable and unrivalled levels of investment” go into producing content. “They are all investing here in India. We are seeing more content made than ever before. It’s a great export,” he added.

Disney+, the recently launched streaming service from the global content conglomerate, is set to be available in India and Southeast Asian markets next year through Hotstar, TechCrunch reported last month.

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No Libra style digital currencies without rules, say EU finance ministers

European Union finance ministers have agreed a defacto ban on the launch in the region of so-called global ‘stablecoins’ such as Facebook’s planned Libra digital currency until the bloc has a common approach to regulation that can mitigate the risks posed by the technology.

In a joint statement the European Council and Commission write that “no global ‘stablecoin’ arrangement should begin operation in the European Union until the legal, regulatory and oversight challenges and risks have been adequately identified and addressed”.

The statement includes recognition of potential benefits of the crypto technology, such as cheaper and faster payments across borders, but says they pose “multifaceted challenges and risks related for example to consumer protection, privacy, taxation, cyber security and operational resilience, money laundering, terrorism financing, market integrity, governance and legal certainty”.

“When a ‘stablecoin’ initiative has the potential to reach a global scale, these concerns are likely to be amplified and new potential risks to monetary sovereignty, monetary policy, the safety and efficiency of payment systems, financial stability, and fair competition can arise,” they add.

All options are being left open to ensure effective regulation, per the statement, with ministers and commissioners stating this should include “any measures to prevent the creation of unmanageable risks by certain global “stablecoins”.”

The new European Commission is already working on a regulation for global stablecoins, per Reuters.

In a speech at a press conference, Commission VP Valdis Dombrovskis, said: “Today the Ecofin endorsed a joint statement with the Commission on stablecoins. These are part of a much broader universe of crypto assets. If we properly address the risks, innovation around crypto assets has the potential to play a positive role for investors, consumers and the efficiency of our financial system.

“A number of Member States like France, Germany or Malta introduced national crypto asset laws, but most people agree with the advice of the European Supervisory Authorities that these markets go beyond borders and so we need a common European framework.

“We will now move to implement this advice. We will launch a public consultation very shortly, before the end of the year.”

The joint statement also hits out at the lack of legal clarity around some major global projects in this area — which looks like a tacit reference to Facebook’s Libra project (though the text does not include any named entities).

“Some recent projects of global dimension have provided insufficient information on how precisely they intend to manage risks and operate their business. This lack of adequate information makes it very difficult to reach definitive conclusions on whether and how the existing EU regulatory framework applies. Entities that intend to issue ‘stablecoins’, or carry out other activities involving ‘stablecoins’ in the EU should provide full and adequate information urgently to allow for a proper assessment against the applicable existing rules,” they warn.

Facebook’s Libra project was only announced this summer — with a slated launch of the first half of 2020 — but was quickly dealt major blows by the speedy departure of key founder members from the vehicle set up to steer the initiative, as giants including Visa, Stripe and eBay apparently took fright at the regulatory backlash. Though you’d never know it from reading the Libra Association PR.

One perhaps unintended effective of Facebook’s grand design on disrupting global financial systems is to amp up pressure on traditional payment providers to innovate and improve their offerings for consumers.

EU ministers write that the emergence of stablecoin initiatives “highlight the importance of continuous improvements to payment arrangements in order to meet market and consumer expectations for convenient, fast, efficient and inexpensive payments – especially cross-border”.

“While European payment systems have already made significant progress, European payment actors, including payment services providers, also have a key role to play in this respect,” they continue. “We note that the ECB and other central banks and national competent authorities will explore further the ongoing digital transformation of the payment system and, in particular, the consequences of initiatives such as ‘stablecoins’. We welcome that central banks in cooperation with other relevant authorities continue to assess the costs and benefits of central bank digital currencies as well as engage with European payment actors regarding the role of the private sector in meeting expectations for efficient, fast and inexpensive cross-border payments.”

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Rocket Lab readies Electron for its first launch with rocket recovery systems on board

Rocket Lab is getting ready to fly its tenth mission, delayed from its first launch window last week and now making its second attempt. Aside from being a milestone 10th mission (dubbed ‘Running Out of Fingers,’ ha), this will be the first time that Rocket Lab includes technology designed to help it eventually recover and reuse elements of its launch vehicle.

After first designing its Electron launch platform as a fully expendable spacecraft, meaning it could only do one way trips to bring cargo to orbit, Rocket Lab announced that it would be moving towards rocket reusability at an event hosted by CEO and founder Peter Beck in August. To make this happen, the company will be developing and testing the tech necessary to recover Electron’s first-stage rocket booster over the course of multiple missions.

To be clear, this mission has the primary goal of delivering a number of small satellites on behalf of paying customers, including microsatellites from Alba Orbital and a Tokyo -based company called ALE that is using microsatellites to simulate particles from meteors. But Rocket Lab will also be testing recovery instrumentation loaddd on board the Electron vehicle, including guidance and navigation systems, as well as telemetry and flight computer hardware. This will be used to gather real-time data about the process of re-entry for Electron’s first stage, and Rocket Lab will also attempt to make use of a reaction control system to control the orientation of the booster as it re-enters.

While this mission will only test those elements of the recovery system, eventually, the goal is to have the Electron first-stage re-enter and deploy a parachute to slow its descent, after which it’ll be intercepted by a helicopter and caught mid-air, with the helicopter effectively towing it to its final drop-off point. It’s a different approach from SpaceX’s powered propulsive landing, but one that’s quite a bit easier from a technical perspective, and mad possible by the lighter weight of the Electron booster, vs. the larger and heavier SpaceX Falcon 9 first stage.

Rocket Lab has completed what’s known as a ‘wet dress rehearsal,’ which is basically a simulated run-up to launch with propellant loaded into the actual rocket, and should be ready to go for later this week, provided conditions are favorable and all other factors remain clear for launch.

You can watch the launch live right here:

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Uber’s fatal accident tally shows low rates but excludes key numbers

Uber’s just-released U.S. Safety Report sets forth in some detail the number of fatal accidents, and the good news is that the overall rate per mile is about half the national average. But the report makes some puzzling choices as far as what is included and excluded.

To create the report, Uber took its internal reports of crashes, generated by drivers, users, or insurance companies, and compared it to the national Fatality Analysis Reporting System, or FARS, a database that tracks all automotive deaths. In this way Uber was able to confirm 97 fatal crashes with 107 total deaths in 2017 and 2018 combined.

As the company is careful to point out before this, more than 36,000 people died in car crashes in the U.S. in 2018 alone, so the total doesn’t really mean much on its own. So they (as others do in this field) put those accidents in context of miles traveled. After all, 1 crash in 100,000 miles doesn’t sound bad because it’s only one, but 10 crashes in a billion miles, which is closer to what Uber saw, is actually much better despite the first number being higher. To some this is blindingly obvious but perhaps not to others.

The actual numbers are that in 2017, there were 49 “Uber-related” fatalities over 8.2 billion miles, or approximately 0.59 per 100 million miles traveled; in 2018, there were 58 over 1.3 billion, or about 0.57 per 100 million miles. The national average is more than 1.1 per 100 million, so Uber sees about half as many fatalities per mile overall.

These crashes generally occurred at lower speeds than the national average, and were more likely by far to occur at night, in lighted areas of cities. That makes sense, since rideshare services are heavily weighted towards urban environments and shorter, lower-speed trips.

That’s great, but there are a couple flies in the ointment.

First, obviously, there is no mention whatsoever of non-fatal accidents. These are more difficult to track and categorize, but it seems odd not to include them at all. If the rates of Ubers getting into fender-benders or serious crashes where someone breaks an arm are lower than the national average, as one might expect from the fatality rates, why not say so?

When I asked about this, an Uber spokesperson said that non-fatal crashes are simply not as well defined or tracked, certainly not to the extent fatal crashes are, which makes reporting them consistently difficult. That makes sense, but it still feels like we’re missing an important piece here. Fatal accidents are comparatively rare and the data corpus on non-fatal accidents may provide other insights.

Second, Uber has its own definition of what constitutes an “Uber-related” crash. Naturally enough, this includes whenever a driver is picking up a rider or has a rider in their car. All the miles and crashes mentioned above are either en route to a pickup or during a ride.

But it’s well known that drivers also spend a non-trivial amount of time “deadheading,” or cruising around waiting to be hailed. Exactly how much time is difficult to estimate, as it would differ widely based on time of day, but I don’t think that Uber’s decision to exclude this time is correct. After all, taxi drivers are still on the clock when they are cruising for fares, and Uber drivers must travel to and from destinations, keep moving to get to hot spots, and so on. Driving without a passenger in the car is inarguably a major part of being an Uber driver.

It’s entirely possible that the time spent deadheading isn’t much, and that the accidents that occurred during that time are few in number. But the alternatives are also possible, and I think it’s important for Uber to disclose this data; Cities and riders alike are concerned with the effects of ride-hail services on traffic and such, and the cars don’t simply disappear or stop getting in accidents when they’re not hired.

When I asked Uber about this, a spokesperson said that crash data from trips is “more reliable,” since drivers may not report a crash if they’re not driving someone. That doesn’t seem right either, especially for fatal accidents, which would be reported one way or the other. Furthermore Uber would be able to compare FARS data to its internal metrics of whether a driver involved in a crash was online or not, so the data should be similarly if not identically reliable.

The spokesperson also explained that a driver may be “online” in Uber at a given moment but in fact driving someone around using another rideshare service, like Lyft. If so, and there is an accident, the report would almost certainly go to that other service. That’s understandable, but again it feels like this is a missing piece. At any rate it doesn’t juice the numbers at all, since deadheading miles aren’t included in the totals used above. So “online but not hired” miles will remain a sort of blind spot for now.

You can read the full report here.

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