Financial services company goeasy is making a $40 million minority equity investment into the online car and delivery startup, Canada Drives.
Goeasy intends to leverage its 2021 acquisition, Fintech startup LendCare, as a preferred non-bank financing provider on Canada Drive’s online automotive retail platform.
The investment is being made in four installments and is structured as a convertible note that will convert into preferred shares. Goeasy will become an observer on Canada Drive’s board as well.
The strategic partnership will enable goeasy to provide automotive financing to non-prime borrowers who purchase and finance a vehicle using Canada Drives’ platform. According to goeasy, the partnership will enable the financial services company to accelerate its plan to become the leading non-bank lender in the $58 billion non-prime Canadian automotive finance market.
Canada Drives currently operates in British Columbia, Alberta, Saskatchewan, and Ontario. The startup plans to use the new funds to expand into new provincial markets, increase its inventory, and enhance its digital platform.
The startup said it intends to double the amount of certified used vehicles available in existing markets and the team to support its ambitious growth plans. Currently, Canada Drives has more than 700 employees.
Jason Mullins, goeasy’s president and CEO, calls the expansion of the company’s automotive financing program a key strategic growth initiative. He said Canada Drives have built an impressive vehicle retail platform while “scaling the business to a meaningful level in a short period of time.”
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Founded in 2010, Canada Drives claims it has experienced significant growth in sales, with a 580 percent increase over the past year.
Canada Drives is not alone in the bustling online automotive market. Clutch secured $150 million in debt financing from funds managed by private investment management firm Neuberger Berman in May to drive its national expansion and inventory of used vehicles. E Automotive (E Inc.) went public in 2021, making $135.7 million CAD in gross proceeds.
AutoZen raised another $5.1 million in June, following $4.2 million in seed financing in 2021.
Canada Drives is not goeasy’s only strategic partnership. The company partnered with the FinTech startup Mogo in 2020 for alternative financing. It announced the partnership five months after the two firms said they would run a pilot program for a personal loan offering.
“As goeasy has proven to be a leader in the consumer lending market, they are an ideal business partner with a common vision for a seamless car buying experience,” said Cody Green, Canada Drives’ founder and co-chief CEO. “We also welcome goeasy as a strategic investor in our business and look forward to working with them as a long-term partner.”