It took a few pivots, but Tred appears to have settled on new business model that its investors feel optimistic about.
The Seattle startup has raised an additional $1 million from existing investors to help used car owners make more money off their vehicles as opposed to what is offered at a dealership.
It does this by operating somewhat as a mobile dealership. The company’s employees facilitate a sale by inspecting your car, taking photos, listing the vehicle across nearly a dozen websites, setting up test drives, and ultimately finalizing a sale with the owner’s approval.
Tred also offers financing, warranties, and buy-back guarantees, which is typical of any dealership. But CEO Grant Feek said that his company enables a used car owner to pay just a 3 percent cut to Tred, versus upwards of 30 percent to a traditional dealership.
“If you trade your car to dealership, you will lose 30 percent or more of the value because the dealership has a lot of fixed costs,” he explained. “They have to run a servicing department, a parts department. They have to finance a lot of cars they own on their lot. There are real estate costs, mortgage costs. We don’t have any of that stuff.”
Tred has tweaked its revenue model since graduating from the Techstars Seattle accelerator in 2012. The original plan was to partner with dealerships and allow customers to conduct test drives from their homes.
Then, the company expanded to create a peer-to-peer marketplace for used cars and started buying and selling used vehicles.
But now Tred is focusing on helping people sell their vehicles. It no longer buys cars and thus does not need to worry about maintaining inventory. The startup now simply makes money by facilitating a sale and reducing the amount of work for car owners.
“This allows us to be a more scalable business,” Feek said. “We provide a service to consumers that is far cheaper than what a dealership would offer.”
Total funding for Tred is now $4 million. The company’s previous investors include Maveron, former General Motors CEO Rick Wagoner, angel investor Chris Sacca, and others. Tred employs 14.