After making a pit stop to recover from the 2022 market downturn, Toronto-based online vehicle marketplace Clutch is back on the road with a $50-million CAD Series D round that pumped its tires, and valuation, back up.
In an interview with BetaKit, Clutch CEO Dan Park said the all-equity round values the company just above its once-peak valuation of $575 million CAD, but did not disclose the exact number. The financing was led by Silicon Valley-based Altos Ventures, with participation from new investors Industry Ventures and BMO Capital Partners, return investors FJ Labs and Flight Deck Capital, and a small group of undisclosed angels.
“It’s been a while since we’ve been in that building phase, so we’re excited about that.”
Dan Park
The valuation is a significant recovery for Clutch, which laid off 22 percent of its staff in June 2022, and then another 65 percent in early 2023 after a $95-million Series C round fell out of its grasp due, it said, to the challenging macroeconomic conditions of the time. Clutch ended up settling for a $20-million round that slashed its valuation by 97 percent to $15 million.
Park said the company increased its revenue by 81 percent last year, ultimately raking in $320 million and demonstrating profitability. Hitting these milestones drew inbound interest and catalyzed the company’s strongest round of funding since its 2021 Series B round.
“Given where the financing landscape has been over the last couple years, we thought this was a good testament to what we’ve achieved over the last two-and-a-half years, and one to capitalize on strengthening our balance sheet, ultimately, to continue to push growth,” Park said.
Clutch has been shoring up its balance sheet for a while, having not even touched last year’s $10-million convertible note financing from iA Financial and a previously undisclosed matching convertible note from Altos, Park said. Now it’s starting to look ahead. Though Clutch continues to focus on its core Eastern Canada market, Park said the company has ambitions to return to Western Canada, a market it abandoned as part of its 2023 layoffs.
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To Park, the more pressing matter is building more of Clutch’s reconditioning facilities, which inspect, repair, and refurbish the used cars the company buys for its platform. Clutch currently has a 100,000-sq. ft. facility in Mississauga and, while no shovels are in the ground yet, Park said the new capital provides the optionality to build new facilities across Canada.
“We’ve been through a lot, but this funding … puts us back on stable ground to allow us to get back to building, and it’s been a while since we’ve been in that building phase, so we’re excited about that,” Park said.
Clutch also said it plans to continue to hire, having added more than 70 vehicle inspectors, mechanics, licensed technicians, apprentices, detailers to its staff in January alone. The wave brought its total headcount up to roughly 240 employees, still a far cry from the 340 it had before its 2022 layoffs, as it stares down yet another potential economic crisis in the looming trade war.
Park described getting out of the previous economic downturn as a “Herculean team effort,” and said that the threat of tariffs affecting the Canadian economy is “disappointing and scary.”
“I’ve been at Clutch for five years, and we’ve gone through a global pandemic and basically an evaporation of growth capital in 2022, I’m certainly not excited for tariffs at this point,” Park said, adding that while tariffs would be terrible for the broader Canadian economy, Clutch is relatively insulated from the direct effects because it sources all its cars from Canada, employs only Canadians, and serves the Canadian market exclusively.
Park said that tariffs and counter-tariffs could put pressure on the automobile, and thus Clutch’s, market in many unpredictable ways, but said he’s confident in his team to navigate whatever is thrown at them.
“We’ve gone through our fair share of existential crises,” Park said. “I think going through really hard things as a team just brings you closer together, and gives us the confidence that we are able to pivot and move things that we need to in order to survive.”
Feature image courtesy Clutch.