DealerPeak, a company that builds sales software for car dealerships, recently raised $3.075 million in an oversubscribed financing round that had participation from some Arizona tech veterans.
DealerPeak LLC, based in Phoenix, makes customer-relations management (CRM) software for used car dealerships to nurture sales leads, track marketing efforts, monitor inventory and assist with the auto financing process.
The funding round was led by Geweke Auto Group in California, with additional participation from Tim Crown, one of the founders of Insight Enterprises in Tempe, Jim Prendergast, co-founder of HealthiestYou, and Zach Ferres, board member and co-founder of Coplex in Phoenix.
Matt Moore, the CEO of DealerPeak, started in the car business as a kid, helping out around his dad’s dealership. He’s since spent his career in and around car dealerships, watching as the internet went from a little-used tool to an essential part of doing business.
Moore said that many car dealerships are family owned and that some have been resistant to adopting technology, but the Covid-19 pandemic has forced them to adapt, which is good news for DealerPeak.
“Now what's happening through all of this, they are also going through a paradigm shift. They are learning how to use Zoom, they are learning the importance of quick communication and transparency. And so I think that we are just primed for a good run.”
The funding will be used to expand the DealerPeak team, which employs about 30 people now, and to set up the company for raising Series A financing in the coming months.
Ferres and Pendergast, two of the DealerPeak investors, sit on the board of Coplex, a venture building studio in Phoenix. Coplex merged with Tim and Eric Crown’s venture capital firm in an effort to expand its reach in 2018.
Coplex was not involved with the DealerPeak funding, but Ferres, who stepped away from the Coplex CEO role last year, has joined the DealerPeak board as its executive chairman.
'Bad habits'
The pandemic has twisted global supply chains into knots, causing delays and shortages of all kinds of products. Semiconductors, the tiny computer chips that serve as brains for most modern electronics, have been in short supply for the past year which has forced some automakers to cut their production.
The lack of new cars means that the market for used cars has been hot, with people paying more than ever for pre-owned rides; the Manheim Used Car Value Index found that prices hit all time highs during the pandemic, but it projects that prices start to drop next year.
Moore said the demand for used cars means that for the first time in his career the used car inventory is appreciating in value instead of losing it, which has made some dealers lazy.
“It's just the weirdest experience ever, that also created incredibly bad habits,” he said. “We recognize that every one of these stores is going to come back and once they get into that desperate mode, they're going to be looking for tools to help them.”
Moore said that existing tools for dealerships are built on the old sales paradigm, but DealerPeak helps dealers utilize enterprise data to shift the sales process online, which will be key once used car prices come back down to a pre-pandemic range.
