This startup pits dealers against each other to bid on your used car

Selling a car is a pain. You can take the easy route and use services like Carvana, but you could end up getting thousands of dollars less than your car is worth. Or you can hope to get more by going to a dealer, but the dealer’s offer can vary widely depending on what They are Looking for it, don’t care about the extra time and effort on your part.

She called a Los Angeles-based startup Bedpuss He’s spent the last few years trying to combine the best of these options, making it so sellers don’t need to leave their couch to get agency-level offers. The company has created a digital marketplace where multiple dealers can bid on a car, a process that results in an average bid that is $2,000 to $3,000 higher than what Carvana offers, according to Bidbus’ founders.

Now, the startup is looking to expand beyond its initial markets of California and Texas, and has raised a $15 million Series A funding round led by early-stage mobility fund Ibex Investors. The round also saw participation from Mucker Capital, FJ Labs, Motley Fool Ventures, DataPoint Capital, Walter Ventures, and Car Dealership Guy’s Yossi Levi.

Bidbus co-founder and CEO Duke Yan told TechCrunch in an exclusive interview that he came up with the idea after years spent buying and selling cars on his own. When he tried to help his mother get rid of her car, the offers from dealers were insultingly low, so he put them in a group chat. To his surprise, buyers started bidding on the price.

“Used car affordability is not a financing problem. It is a market efficiency problem. Consumers lack true trade-in price discovery, dealers struggle to obtain high-quality inventory, and much of the best supply remains stranded in people’s driveways,” Yan told TechCrunch.

It’s a smart combination. Dealerships are already buying cars at auctions to fill inventory, so the startup isn’t pitching a foreign idea. Yan said Bidbus helps dealers by bringing them high-value used cars, which usually come from private sellers. The startup takes advantage of the difference between what online sellers are willing to pay and the typically higher reseller payout: a difference that can amount to thousands of dollars.

But getting more money from vendors, even after Bedbus took a stake, wasn’t enough for Yan. He also wants to make the experience fun, and has drawn inspiration from stock trading apps like Robinhood and social media apps like TikTok.

Once a car is accepted on the platform, dealers only have a few hours to bid. Bidbus displays live quotes with the corresponding offers displayed in large font. Bidbus users are expected to share screenshots or videos of this activity to increase awareness of the app and attract new potential sellers, Yan said.

“Our vision is to make car selling as transparent and competitive as stock trading, where the price is determined by market competition and not by a single buyer,” Yan said.

Yan said that growing bedbus was not easy. The company was initially bootstrapped, and while it got some early interest, he admitted he had to ban one of the platform’s largest traders.

“At that time, he was the only one who bought a lot of cars, so he felt he could get away with bargaining or depreciation,” Yan said. “It was painful at first, but now our platform is better than ever. We have five to eight other merchants like him, buying a lot, and maintaining the standards (of experience) that we want our customers to experience.”

Jeff Peters, a partner at Ibex who led the funding round, said he held off on investing in Bidbus’ seed round because the company was only operating in Los Angeles at the time. But once Bidbus started expanding into new markets, attracting new customers, and landing deals with dealer groups like Lithia Motors and Penske Automotive, Peters wanted to get on board.

“This seems to be scalable, and it’s a global problem and a global opportunity, at least across the United States,” he told TechCrunch. “And I think it will be permanent as well, because some of the most durable business models are marketplaces.”

“At the end of the day, they provide value to consumers by giving them an extra $2,000 to $3,000 toward their vehicle, as well as allowing dealers to build their inventory and access new inventory they couldn’t access before.”

Bidbus has so far helped people sell about 10,000 cars on its platform, and Peters said he sees a lot of upside. Carvana has proven that selling a car online can be simple and fast, Peters said. Now that car owners are used to the idea, he added, “I think people will largely be looking for the best deal, whatever way they can find it.”