Historic $1.8M pre-seed round boosts auto startup with former BacklotCars VP at the wheel

Anders Ericson is tackling an overlooked problem in the auto industry, he shared, and investors are not missing an opportunity to back his solution.

“There’s this glaring problem in the marketplace where people with subprime credit, trying to buy a car, go to these specialty dealerships and pay double what a vehicle is worth – and they get hit with 25% interest on top of that. They’re set up to get their car [repossessed]. It’s a bad situation and an endless cycle of debt,” said Ericson, Founder and CEO of whipz.

Whipz is a digital retailer, specializing in high mileage affordable cars.

“We are focused on streamlining access to financing for people with subprime credit or thin credit profiles,” Ericson explained, noting that all vehicles are priced at $20,000 or less with more than 100 000 miles – a mileage range that other online used car dealerships don’t touch.

All vehicles go through a strict inspection and reconditioning process; and customers have five days or 250 miles to test drive the vehicle, he noted.

Click on here to discover Whipz and its inventory.

ignition switch

Ericson began to familiarize himself with the automotive industry when he joined the BacklotCars dealer-to-dealer automotive platform team in 2015 as vice president of sales, he recalls. When BacklotCars came out for a landmark $425 million deal in 2020, Ericson had the knowledge and resources to go on and create his own startup.

Whipz officially launched earlier this month, with a $1.8 million pre-seed round already finalized. It’s believed to be the biggest draft round in Kansas City history, Ericson said. The funding round was supported by four venture capital funds – M25, KCRise Fund, Lancaster Investments and Nelnet — as well as supporters from the BacklotCars community, Ericson said.

“We had a target of $1.5 million, and then we got oversubscribed,” Ericson noted. “We also ended up refusing money later. But we had some late entrants that we really wanted to get on our cap chart, so we brought them in. …We probably couldn’t have done it without the Backlot[Cars] story.”

Victor Gutwein, founder and managing partner of M25, sees Whipz as an even bigger business than BacklotCars, he said, adding that Ericson will be able to build on its past experience.

“It hasn’t been often enough that you find a critical early leader of a hugely successful homegrown technology outcome starting over in the same industry with an equally large – or arguably much larger – market opportunity,” Gutwein said. . “This type of vision has traditionally been somewhat rare in the Midwest, but Anders has clearly set his site on $426 million and above.”

Some of the other Whipz investors are individuals who quit investing in BacklotCars and didn’t want to miss the opportunity, Ericson said.

Click on here to learn more about BacklotCars’ $425 million exit and what led its founders to success.

Having the support of four venture capital funds is essential, he continued.

“Because if we need an extra round before our [seed] funding cycle, a fund is able to write a big check for another six months or a year of money,” Ericson explained. “A lot of early-stage startups don’t have that luxury. The other benefit is that once we get into our Series A, they have a lot of good relationships with larger funds to help close that funding round.

Drawing on what Ericson learned during his time at BacklotCars, he is focused on aggressively hiring a strategic team early on, he shared. From its growing team of 10 people, the transport team is made up of people who previously worked at BacklotCars.

“Sean Hampton is our vice president of logistics and he’s really scaled the entire transportation team at BacklotCars,” Ericson said. “…And then Kelli Gray was the number one transportation manager on the team, so we really have a great logistics team. We’ve done a great job pitching our vision to potential employees and we’ve got a lot of smart people on board – and we know there’s a lot more talent here in Kansas City.

Step up a gear

The $1.8 million in funding will be used to continue hiring and training employees, as well as refining processes, Ericson said.

“We know that at the beginning there will be a lot of things that we will do wrong, and that will change on the fly,” he said. “But it will lead us to find the best strategies for our sales process and our marketing channels.”

During its three weeks of operation, Whipz sold a handful of vehicles in multiple states, Ericson said.

“We don’t just sell our cars in Kansas City. Our first car was shipped to Manhattan, Kansas, then East St. Louis, Branson and Arkansas,” he said. “It shows the reach of this business.”

Ericson, who grew up in Wisconsin and previously worked in San Francisco, ultimately decided to start his company in Kansas City because of the talent and entrepreneurial support system he shared.

“It’s a hidden gem for those outside of Kansas City,” Ericson said. “People are so welcoming and everyone wants you to succeed. Rarely are people so loyal.