The encyclopedia · Finance & Accounting · Financial decision · 2013–2017
Beepi raised $150M to fix used-car selling — and sold itself for parts
The online used-car marketplace peaked at a $560M valuation and burned about $7M a month; in February 2017 it went to a creditors' sale.
Beepi · 2017-02
What happened
Beepi launched in 2013 in Mountain View, founded by Alejandro Resnik and Owen Savir, with a promise to take the dealership out of used cars: it inspected, bought and sold cars online, picked them up and delivered them. Investors piled in — $150 million from 35 backers, including Yuri Milner, Redpoint and Foundation Capital — and at its peak Beepi carried a $560 million valuation.
The economics never caught up. Buying, reconditioning and delivering cars one at a time cost more than the margins could return, and the company burned about $7 million a month at its height. A planned $300 million round in 2015 never closed, and a rescue deal with a Chinese investor fell apart in late 2016. In December 2016 Beepi laid off 200 of its 300 staff and stopped operating outside California.
Exit talks collapsed one after another — Fair walked away from buying the company, and a dealer group's offer failed when Beepi ran out of cash mid-sale. In February 2017 the company shut down and went into an assignment for the benefit of creditors; Fair came back only to buy the code, the algorithms and the brand, and hire about 23 people. Even after the asset sale, roughly $6 million of creditor claims went unpaid.
Why it happened
- Concierge unit economics never worked: buying, fixing and delivering each car cost more than the margin on it.
- A $7M monthly burn needed ever-bigger rounds; when the $300M round and the rescue deal both failed, the runway ran out.
- Three exit talks — Fair, CarMax, DGDG — fell apart in sequence, and by the last one the cash was gone.
The lesson
Beepi proved investors would fund $150M of ambition, but the market would not fund the margins. At $7M a month, a $560M valuation buys about two years — then even the brand sells for scraps.
Aftermath
Fair bought Beepi's code, algorithms and brand and hired about 23 staff; the rest went to creditors, roughly $6 million short.
Sources
- TechCrunch, 16 February 2017 — Car startup Beepi sold for parts after potential exits to Fair, and then DGDG broke down (Beepi shut down completely and was sold off in parts to repay creditors through an assignment for the benefit of creditors managed by Sherwood Partners; founded by Alejandro Resnik and Owen Savir; raised $150 million from 35 investors including Yuri Milner, Comerica, Redpoint, Foundation Capital, Sherpa Capital and SAIC; peaked at a $560 million valuation after founders sought $2 billion in 2015; burned about $7 million a month at peak; laid off 200 of its 300 employees in December 2016; a sale to Fair fell apart and a DGDG dealer-group offer failed when Beepi ran out of cash during the process; a reported $90 million Chinese funding deal fell through in late 2016; Fair later bought the code, algorithms and brand and hired about 23 employees; the company remained about $6 million short on creditor debts at the end of January 2017)
- IdeaProof failure analysis — Beepi: The $149M loss (founded 2013 by Ale Resnik and Owen Savir; raised about $149 million, peak valuation reported at $560 million; peer-to-peer used-car marketplace with concierge inspection and delivery; gross margins on used cars could not cover the unrecoverable per-transaction costs of the concierge model; extravagant spending including a $1.5 million office lease before margins were proven; a planned rescue round collapsed in August 2016 leaving no runway; competitors Vroom and Carvana executed the same concept more efficiently; wind-down began in December 2016 and assets were sold in February 2017)
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