Motobyo is turning to crowdfunding to power a national expansion plan after seeing success with its used car marketplace in the Philadelphia region.
Following a beta launch of its platform in the 10-county Philadelphia region in August 2022, the company is now looking to raise $4 million in order to immediately expand across the Keystone State, North Jersey and New York. Later in 2023 it hopes to roll out the marketplace in metro areas like Baltimore, Washington, D.C., Chicago, Dallas, Cincinnati, Atlanta and Birmingham, Alabama.
The Horsham-based startup was founded by George Lekas, a 30-year veteran of the auto industry, and Ron Averett, who has made successful exits with two separate companies. Averett is a three-time CEO, helming AcceptEmail, Softgate Systems and Princeton eCom. The latter two were venture-backed firms and Averett has played a role in raising $90 million of capital in his roles.
Previous funding for Motobyo includes a $2.5 million capital raise $1.1 million invested by the founders. The company hopes to raise the $4 million in 75 to 90 days and is doing so at a $13 million valuation. Averett, the CEO, hopes to have 75% to 80% of the fundraising secured within 45 to 60 days.
Motobyo is an e-commerce marketplace that allows people to buy and sell used cars. It presents prospective sellers with an option to accept a cash offer based on technology that determines a projected market price, or put the car up for a seven-day auction. The cash offer, calculated by transactional data and current market conditions, is a "safety net" that sellers can accept immediately or if their car doesn't sell at auction. If accepted, sellers trade their cars for a check at car dealerships Motobyo has partnered with called its "buying centers." Motobyo also offers buyers and sellers services like an independent third-party inspection, financing and insurance, titling, vehicle history and DMV services.
After generating 1,200 users in the Philadelphia area in January, the company now has over 3,500 monthly users, according to Averett. By the end of the year, he hopes that number can grow to 7,500 to 10,000. That's because in the past 30 days Motobyo has been testing its services in markets across the country and says it now has account holders in 40 states. It's mainly doing that through increased marketing in other metro areas, specifically in the Southeast and Midwest. That increase in exposure tied to Averett's reasoning for turning to crowdfunding.
"As we were headed down this path to national receptivity, crowdfunding seemed a smart way to broaden exposure to the everyday person," Averett said. He added that in the national test process, Motobyo had signups "from Portland, Oregon to Portland, Maine."
Another pillar of its expansion is creating more partnerships with car dealerships, which fulfill the cash offer on the car. Motobyo currently has 30 such partners in the Philadelphia area, and has recently added buying centers in Buffalo, Pittsburgh, Chicago, Washington, D.C. and Birmingham. It's working on adding partners in 10 to 15 more cities to supplement expansion.
The company currently has 13 employees, and hopes to use the money to add five to 10 new hires.
The crowdfunding model opens the startup up to a wider pool of potential investors to make smaller investments compared with traditional venture capital raises. Motobyo is crowdfunding through two platforms: Netcapital and Fundable. On Netcapital, the minimum investment is $99, while Fundable restricts its pool to accredited investors — a more traditional venture capital group.
The used car market has been rather volatile over the last few years. In December 2021, inflation for used cars and trucks in the Philadelphia area was up 38.6% year over year, according to the Bureau of Labor Statistics. The latest data from February shows that number dropping 13.6% from a year before.
"People are still looking to sell their car, whether we are in a recession or headed into one, your vehicle is an asset you can cash in to generate some income," Averett said. "From our perspective, we’re seeing enough activity to fuel our growth."
