August 23, 2021
Canada Drives, an online car retailer, announced that it has raised $100 million CAD in its latest round of funding. The round was led by Jeff Housenbold’s Honor Ventures and included participation from KAR Global and other strategic investors. This brings the company’s total funding to over $200 million. Previously, the company had raised a Series A round in early 2019. This funding round follows other substantial investments in technology companies focusing on the auto sector, such as a recent $60 million CAD funding round raised by Clutch, another Canadian online car shopping platform.
Founded in 2010, Vancouver-based Canada Drives was originally an auto financing platform—assisting customers with financing their vehicle purchases, no matter their financial circumstances, by matching them with suitable local dealers and lending partners. Since its inception, it has expanded to automobile sales, providing a 100% online car shopping and financing experience.
Founder and Co-CEO Cody Green says the company’s objective is to provide a “more transparent, convenient and ultimately enjoyable car purchasing experience for Canadians”. Customers are able to purchase a car online and have it delivered to their home within 24 hours. Canada Drives boasts its “best-price-first” pricing strategy, which it claims builds trust with its customers. All of the cars in its inventory have gone through a 150-point safety inspection and come with a no-charge 30 day/1,500 kilometre warranty. The online platform also provides a 7 day “Love it Or Return it Guarantee”. If it doesn’t meet their customers’ expectations, they can return it—no questions asked.
Their value proposition has proven to be popular with Canadians. To date, over one million Canadians have used Canada Drives to purchase and finance vehicles. Additionally, the COVID-19 pandemic and the company’s recent expansion into Ontario have aggressively boosted its growth. Since May 2021, the company’s customer base has grown by 50 percent month-over-month.
A recent Car Gurus study reveals that 60 percent of Canadians are open to buying cars online, with 41 percent actually preferring buying online. This is a substantial jump from only 19 percent preferring to buy a car online prior to the pandemic. In order to meet this new demand, Canada Drives says the new round of funding will be used to improve its product, grow its inventory, and hire 200 more employees. The company also plans to expand to Alberta next month.
As Canada Drives races to win this new market share, it faces competition from other Canadian online car retailers, including Toronto-based Clutch, which raised $60 million in funding in March, and Saskatoon-based Curbie, which closed a $7 million seed financing round in May.
Author: Eran Rubman