Toronto-based online used car retailer Clutch has raised 7M CAD in a seed round led by new investors Real Ventures and Global Founders along with existing investors BrandProject Capital, FJ Labs and Azure Capital Partners in July 2020.
The startup plans to use the new funds to help increase its business in Toronto and Halifax and also hire new team-members.
Stephen Seibel founded Clutch in 2016. The startup sells used cars in Toronto and Halifax and its goal is to bring speed and convenience to used car sales. The company claims itself to be “Canada’s first online car retailing platform,” and offers customers a fully online car purchase experience, from financing and insurance to at-home delivery and test drives.
The startup provides an online list of used cars through its website and mobile App. Due to unfavorable regulations in Ontario, Clutch first launched in Halifax in 2017. It began operating in Toronto in January 2020, securing registration with the Ontario Motor Vehicle Industry Council following confrontation from used car dealerships over the authenticity of its service. By removing the cost of maintaining a physical dealership, doing away with commissions, and storing its cars more cheaply in warehouses, the company feels it is offering already existing services in the market at lower prices.
Janet Bannister, managing partner of Real Ventures and founder of Kijiji.ca, is joining Clutch’s board of directors. He was quoted to have said, “Increasingly, customers are demanding an easy, transparent, risk-free way to buy all goods and services online. While the auto industry has traditionally lagged other categories in providing consumers with this type of offering, Clutch is changing this. Clutch is offering Canadians, for the first time, a best-in-class e-commerce experience for used cars.”
Founder and COO, Seibel said, “Clutch was borne out of my frustration with the traditional car buying process, which instills very little confidence and takes hours. Our company was founded on a number of core values including building trust with our customers, making magic with every purchase and building a company that makes a positive impact on our communities.”
Clutch claims to have over 100 vehicles in its catalog, including one of the largest collections of pre-owned Tesla in Ontario. Its website currently lists 210 cars available for buying in Toronto and 169 in Halifax. The company organizes, inspects and keeps many of the cars it has listed in its physical inventory. Cars are obtained from auctions, trade-ins, car manufacturers, and the public, on an individual basis. It aims to “buy well” in order to sell consumers’ cars at good prices and makes use of data science to manage its purchasing and pricing choices. Clutch has also partnered with other used car platforms like TradeRev to list cars on its platform.
The platform shows pictures of vehicle wear and tear, provides “instantly downloadable” CarFax reports, and 360-degree internal and external photos of its vehicles. They do not charge any hidden fees and have a seven-day money-back guaranty on all cars sold. Clutch CEO Dan Park, who was also the former head of Uber Eats Canada said, “We thought there was a better way to buy a car. We’re trying to build and create a car-buying experience from the ground up. The goal is to continue to grow the Toronto market, and over the next couple of months we’ll start exploring additional markets prior to Clutch’s Series A.”
The startup had previously raised 0.2M CAD from Engage Ventures and BrandProject Capital in a seed funding round in 2018.
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