A startup by two industry veterans trying to create a new channel for selling used vehicles just got a massive capital injection — and a de facto endorsement from two major industry players.
Fair, the company behind a mobile app that lets consumers obtain vehicles online for as long or short as they want, this month received almost $1 billion in a strategic funding led by BMW i Ventures and including money from Penske Automotive Group Inc.
Fair, of Santa Monica, Calif., was launched in September by Scott Painter, former TrueCar CEO, and Georg Bauer, former head of financial services for Tesla Inc. and BMW.
Fair's app allows consumers to prequalify for financing online, select a specific used vehicle from a list in their monthly payment range, pick up that vehicle after putting money down and making the first monthly payment and then have the flexibility to return the vehicle at any time.
Fair is trying to create a niche that gives drivers an option between a short-term rental and conventional fixed-term lease or purchase, Bauer told Automotive News.
"It's not a loan, a lease or a rental," said Bauer, who serves as the company's president. "The consumer can keep the vehicle two weeks, two months or six years. It combines the convenience of a rental but the low payments of a lease."
A central part of Fair's business model is attracting two types of consumers that dealerships have trouble reaching: people who don't want long and fixed commitments to a vehicle and those who have financial assets but don't qualify for conventional financing.
The funding provides a big dose of liquidity in the startup's second month of operation. Fair said the investors include a group of institutional investment banks that traditionally back auto debt portfolios and an entity led by Sherpa Capital that was created to fund alternative transportation models such as flexible ownership and short-term rentals.