# Beepi (2013 – 2017)

- URL: https://girisimcikafasi.com/en/startup-graveyard/beepi/
- Sector: Marketplaces
- Country: United States
- Total funding: $150 million
- Cause of closure: Ran out of cash

## What did it do?

Beepi was a Mountain View-based marketplace that inspected and prepared private sellers' used cars, sold them online and delivered them to the buyer's door. It aimed to eliminate dealership commissions and build trust through strong customer service. It operated in 16 markets in the US.

## Why did it shut down?

As it chased a high valuation, the company lost its cost discipline; according to a former employee, at its peak it was burning around $7 million a month. A round targeted at $300 million in 2015 stalled at $70 million, and a strategic investor wanted to pull out in 2016. Rival dealerships began offering similar services at lower cost. When sale talks with Fair.com and DGDG collapsed, the company sold its assets for the benefit of creditors in 2017.

## The story

The used cars Beepi sold were delivered to buyers with a huge bow tied to the bonnet. The promise on the company's website said as much: “A bow for everyone.” That small detail summed up the pitch of the start-up founded in Mountain View in 2013: to make buying a used car, without ever setting foot in a dealership, as enjoyable as buying a new one.

The model of Beepi, founded by Ale Resnik and Owen Savir, was simple. Sellers entrusted their cars to Beepi, which inspected and prepared them, sold them online and delivered them to the new owner's door. That cut out dealerships' high overheads and commissions. The model excited investors: around $150 million was raised from 35 investors, including Yuri Milner, Redpoint, Foundation Capital, Sherpa Capital and Fabrice Grinda, and at one point the company was valued at $560 million. In 2015 CEO Resnik told The Wall Street Journal that they were targeting a $300 million round at a $2 billion valuation.

That round never came; the round that closed in December 2015 stalled at $70 million, and, according to TechCrunch's estimate, the Chinese carmaker that led it wanted to pull out of the company in 2016. Spending, meanwhile, was high. According to a former employee, at its peak of 300 employees the company was burning around $7 million a month, a large part of it going on high salaries and overtime. Problems such as failing to get number plates and registration documents to new owners on time marred the customer experience; and when dealerships began offering a similar service at much lower cost, the model became harder to defend.

In December 2016 Beepi closed its operations outside California, laid off 180 people and announced a merger with Fair.com, which had not yet launched. That deal fell through over a disagreement about terms; talks with DGDG, a Bay Area dealership group, also came to nothing because the company ran out of money. In February 2017 The Wall Street Journal reported that Beepi had begun selling its assets through an assignment for the benefit of creditors, an alternative to bankruptcy.

Beepi shows that a marketplace that loses its cost discipline while chasing a valuation can unravel within months when a single investor pulls back.

## Lessons

- Make the gap between monthly burn and revenue, not your valuation target, the board's main agenda item.
- In operations-heavy marketplaces involving vehicle inspection, registration and delivery, do not open new markets before proving your unit economics in a single city.
- Do not make a round depend on one large strategic investor; have a plan B ready in case that investor pulls out.

## Sources

- [Car startup Beepi sold for parts after potential exits to Fair, and then DGDG, broke down](https://techcrunch.com/2017/02/16/car-startup-beepi-sold-for-parts-after-potential-exits-to-fair-and-then-dgdg-broke-down/)
- [Used-car marketplace Beepi shuts down outside of CA, merges with stealth Fair.com](https://techcrunch.com/2016/12/07/used-car-marketplace-beepi-shuts-down-outside-of-ca-merges-with-stealth-fair-com/)
- [Beepi Winding Down After Burning Through $150 Million](https://www.wsj.com/articles/beepi-winding-down-after-burning-through-150-million-1487203816)