Clutch raises $7 million CAD seed round to expand online used car retail platform

Online car retailer Clutch, which sells used vehicles in Toronto and Halifax, has raised $7 million CAD in a seed round led by new investor Real Ventures.

The round, which represents the bulk of Clutch’s funding to date, also included new investor Global Founders Capital, and existing investors BrandProject, FJ Labs, Azure Capital Partners. Its terms were agreed to in March, and the round closed in early April.

“Clutch is offering Canadians—for the first time—a best-in-class e-commerce experience for used cars.”

Clutch plans to use the new capital to help scale its business in Toronto and Halifax, and grow its team. Janet Bannister, managing partner of Real Ventures and founder of Kijiji.ca, is joining Clutch’s board of directors.

“We thought there was a better way to buy a car,” Clutch CEO Dan Park, former head of Uber Eats in Canada, told BetaKit. “We’re trying to build and create a car-buying experience from the ground up.”

“The goal is to continue to grow the Toronto market, and over the next couple of months we’ll start exploring additional markets prior to the [Clutch’s] Series A,” the CEO added.

Founded in 2016, Clutch aims to bring speed and convenience to used car sales. The company, which calls itself “Canada’s first online car retailing platform,” enables customers to access a full online car purchase experience, from financing and insurance to at-home delivery and test drives.

Park told BetaKit that Clutch envisions making buying a car “as easy as buying something from Amazon.”

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The startup offers online-only listings through its website and mobile app. Due to regulatory pushback in Ontario, Clutch first launched in Halifax in 2017. It began operating in Toronto in January, securing registration with the Ontario Motor Vehicle Industry Council following resistance from used car dealerships over the legality of its service.

By dispensing with the cost of maintaining a physical dealership, doing away with commissions, and storing its cars more cheaply in warehouses, the consumer-facing company claims it can offer customers vehicles at lower prices.

“Increasingly, customers are demanding an easy, transparent, risk-free way to buy all goods and services online,” said Bannister. “While the auto industry has traditionally lagged other categories in providing consumers with this type of offering, Clutch is changing this. Clutch is offering Canadians—for the first time—a best-in-class e-commerce experience for used cars.”

“Clutch was borne out of my frustration with the traditional car buying process.”
 

“Clutch was borne out of my frustration with the traditional car buying process, which instills very little confidence and takes hours,” said Steve Seibel, Clutch’s founder and COO. “Our company was founded on a number of core values including building trust with our customers, making magic with every purchase, and building a company that makes a positive impact on our communities.”

“Right now, Canadians really only have two options to buy a car,” said Park. “Either you spend four to five hours at a traditional dealership, which is generally not consumer-focused, or you go onto something like Kijiji or AutoTrader and you find a stranger and meet them in a parking lot.”

Clutch claims to have over 100 vehicles in its inventory, including one of the largest selections of pre-owned Teslas in Ontario. Its website currently lists 210 cars available for purchase in Toronto and 169 in Halifax.

Unlike other online used car-buying platforms such as AutoTrader or Kijiji Autos, Clutch curates, inspects, and holds many of the cars it lists in physical inventory. The company sources its supply of cars from auctions, trade-ins, car manufacturers, and the public, on an individual basis. It aims to “buy well” in order to sell consumers’ cars at good prices, and leverages data science to inform its purchasing and pricing decisions. Clutch also partners with other used car platforms like TradeRev to list cars on its platform.

Clutch’s platform shows consumers pictures of vehicle wear and tear, provides “immediately downloadable” CarFax reports, and 360-degree interior and exterior photos of its vehicles. Unlike some traditional used car dealerships, Clutch has no hidden fees. It also offers a seven-day money-back guarantee on all cars sold.

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“Our company is founded on trust and transparency,” said Park. “Everything you see on the site is what you’ll see when you get it.”

Clutch is headquartered in Toronto, and currently employs a team of 30 between Toronto and Halifax.

Two other former senior Uber Eats executives, Karthik Sundaresan and Andrew Tiffin, also joined Clutch’s team in February. Sundaresan, Uber Eats’ former head of US and Canada strategy and planning, joined Clutch as chief supply officer. Tiffin, former chief of staff to the head of Uber Eats North America, joined the team as VP of operations.

Park’s vision for Clutch is in part shaped by his experience at the helm of Uber Eats Canada. “Similarly, I think there’s an opportunity to build a brand, a nationwide brand across the country in car retailing, and we’re starting in the east,” he said.

Like Uber Eats, Clutch plans to build a business that “provides a very consistent experience, no matter what province you’re in,” the CEO added.

Park doesn’t anticipate any issues gaining regulatory approval to operate in other parts of Canada, noting that he views the Ontario environment as similar to some of the other provinces. He also credits regulators for adapting as the market for used car sales moves online.

“As a market and as an industry, we think the regulation is just going to continue to evolve to allow and make it easier to conduct trade online,” said Park.

Josh Scott

Josh Scott

Josh is a journalist interested in telling Canadian business and tech stories. His coverage is more complete than his moustache.