Bill Gates’ private investment vehicle is one of the largest shareholders in Vroom, a tech-fueled online used car seller that went public on Tuesday.
Cascade Investment LLC owned a 7.2% stake in Vroom prior to the public offering, according to the company’s IPO documents.
It’s a somewhat surprising investment for Gates, though the Microsoft co-founder does have stakes in transportation-related companies such as the Canadian National Railway Company and Seattle digital freight startup Convoy.
Vroom priced its stock at $22/share, aiming to raise around $470 million and valuing the 7-year-old company at more than $2 billion. Shares more than doubled on its first day of trading as of 9 a.m. PT.
Vroom priced shares above its previous range, signaling that the window for initial public offerings is opening up even amid a fragile period for the global economy. Vancouver, Wash.-based marketing software startup ZoomInfo also priced above its range and saw shares spike 62% on its first day of trading last week.
New York City-based Vroom helps consumers buy and sell used cars online, offering financing, delivery, and more. It sold nearly 19,000 vehicles last year, up from 10,006 in 2018. The number of vehicles on its platform increased from 2,963 to 5,107 in the first quarter, while average monthly visitors more than doubled.
Vroom reported $1.2 billion in revenue in 2019, up almost 40% year-over-year, with a net loss of $143 million. The company furloughed about one-third of its workforce last month due to COVID-19 distruptions but said it has brought back 60% of those employees.
The company estimates that there is only 0.9% e-commerce penetration in a U.S. used vehicle market that produced $841 billion in sales last year.
Vroom CEO Paul Hennessy said the business is seeing positive momentum over the past few months, noting trepidation with a return to mass transit and the contactless nature of Vroom’s buying process. He cited data showing that customers are now twice as likely to buy a used vehicle online.
“We believe the market is really coming our way and that creates a tailwind,” Hennessy told CNBC on Tuesday.
