Firm created by Microsoft co-founder invests $30M in TrueCar
TrueCar Inc., reportedly considering an initial public offering next year, said Vulcan Capital -- a private equity firm created by Microsoft co-founder Paul Allen -- has invested $30 million in the vehicle-shopping site.
TrueCar intends to use the money for growth and product development, TrueCar CEO Scott Painter said in an interview today.
Painter said the investment by Allen’s firm is validation of TrueCar’s success, while providing additional capital for TrueCar. Painter declined to comment on whether TrueCar is considering an IPO.
“This (investment) is another milestone,” Painter said.
TrueCar.com is an online shopping site that allows shoppers to get guaranteed prices on vehicles from participating dealers.
Painter said TrueCar is profitable and he expects participating dealerships to sell 400,000 vehicles this year from the shopping site, up 60 percent from the 2012 total.
TrueCar has about 7,000 participating franchises and is adding more to expand geographic coverage.
That’s a far cry from early 2012, when regulatory woes caused TrueCar’s network of franchises to fall from about 5,600 to a low of about 3,200.
Painter engineered a transformation of TrueCar in 2012 after the company had to suspend operations in several states temporarily to fix regulatory concerns about its advertising and pricing practices. The company lost $75 million in 2012 on revenue of about $85 million, he said.
Late last month, Bloomberg reported that TrueCar is working with Goldman Sachs Group Inc. and JPMorgan Chase & Co. on an IPO, citing two sources the outlet declined to name.
Vulcan Capital is a multibillion investment arm of Vulcan Inc., a company created by Allen.
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