Online car buying platform Clutch wants to service 90% of Canadians by end of 2023

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Clutch aims to be Canada’s largest online used car buying platform. The company, which was founded in 2016, has just closed an $80 million (CAD$100 million) Series B round that it will use to grow its team, expand its logistics capabilities, and expand its inventory. Will do to scale up as it prepares to move into new Canadian markets.

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“We want to serve 90% of Canadians by the end of 2023,” Clutch CEO Dan Park told Nerdshala. “And that includes launching in a few more major cities across Canada. Cities like Montreal or Winnipeg are just some of the big cities in Canada that we’ll be going to eventually.”

Clutch is one of a handful of online car dealers to hit the market in recent years, each with a regional focus. Caravana and Vroom are the biggest players in the US, with Kazoo crushing Kawak in the UK and Mexico to name a few. Clutch is headquartered in Toronto and serves Alberta, British Columbia, Nova Scotia, New Brunswick, Ontario and Prince Edward Island, but plans to expand over the next year. By focusing on the Canadian market, with a focus on international expansion, the company hopes to capture a multi-billion dollar opportunity ahead of competitors such as Canada Drives.

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Clutch has sold thousands of older vehicles on its site, according to Park, and currently has about 1,250 more in stock. It has used past debt financing to support the acquisition of vehicles, which it acquires from auctions, private sellers and fleets, before it puts them through a rigorous 210-point reconditioning process, during which clutch The mechanics ensure the safety and good looks of the vehicle. The fresh car is then delivered directly to the end consumer on a flatbed in a way that “feels as magical as possible – click a button and show a car in your driveway!”

This most recent financing round – Which was Led by D1 Capital Partners, with participation from Flight Deck Capital, Canaan Partners, Upper 90, Real Ventures, GFC, BrandProject and FJ Labs – Over the next year, Clutch will not only help grow its team from around 160 employees to over 250, but will also help build the required infrastructure and logistics network on a large scale. Clutch has a chain of warehouses across Canada that are used to store vehicles until they are ready to be delivered, often as soon as the next day.

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“Building inventory and selecting vehicles that are wide and varied is a massive focus for next year,” Park said. “We know that as much as you might be a fan of Clutch, if you’re really looking for that blue Subaru Outback that has 50,000 kms on it and new from 2018, and we don’t have that model in stock, then chances are. You’re buying from Clutch a lot less. We want to serve the needs of as many Canadians as possible. And so building that inventory and building that selection is a big focus and indirectly on the use of the proceeds as we Think about next year.”

E-commerce is only one part of Clutch’s business model. Park says about half of its revenue also comes from fintech offerings like warranties, insurance and financing.

“What we’re trying to do here is really provide this streamlined experience and historically there hasn’t been a lot of vertical integration on that side,” Park said. “If you can not only provide a great car buying experience, you can also offer this wonderful ownership experience, which includes providing these financial products that you know will help the consumer in some cases without credit. Rebuilding may help, but giving them a better ownership experience than a vehicle.”

As Clutch begins to scale, it expects to see better unit economics. The most expensive parts of the business include getting the vehicle itself, as well as the logistics of getting the vehicle through the production process. Expanding further across Canada will help the company achieve efficiencies on parts purchase, delivery truck use, lift usage and other costs that can amortize on more units a day.

Because Clutch is a used car marketplace, only a small portion of its inventory is electric vehicles, but Park sees that change in the years to come.

“We believe that our model is better suited for EVs,” he said. “EVs generally require fewer repairs. A gas-powered vehicle has 2,000 moving parts and an electric vehicle has 200 and so naturally, it requires less maintenance.”

While many traditional dealerships rely heavily on parts and services to achieve a major profit margin, Clutch doesn’t make its money. Margins aside, when Clutch sells an ICE vehicle, Park noted that the company, bless its heart, donates three trees to whatever area the car is being shipped to. The park says that today Clutch has planted about 8,000 trees.

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