Steve Schlenker reflects on investing in Auto1
AUTO1 Group, Europe’s leading multi-sided platform for the used car sector, announced a €460 million investment by SoftBank Vision Fund last week. The investment, of which around half will be made through the issue of new shares, values AUTO1 at €2.9 billion and will support the Group’s continued growth and international expansion.
Steve Schlenker, Managing Partner of DN Capital, reflects on the investment: “When we led Auto1’s Series A round in 2013, a number of other venture firms passed on the company. Of course, the used car market was huge – over €300 billion-a-year in Europe alone. And the founding team was clearly outstanding. Co-founders Christian Bertermann, who was VP Product at Groupon, and Hakan Koç, formerly entrepreneur-in-residence at Rocket Internet and Chief Product Officer at Home24, had tremendous operational experience, and were very used to growing and executing with speed and vigour. But buying cars with equity euros? That went completely against the light asset model that most VC firms were used to.”
“Yet at DN Capital we saw something different. First, the ability to use technology to predict which cars would sell where and to whom, to make better purchase decisions and drive margins. Second, the economies of scale that would come with building a proprietary dealer network, which would enable sellers of cars to not only get fast cash, but great prices too. All of this was overlooked by other investors.”
“There was another element to our decision-making. At DN Capital we have done a lot of business in Berlin’s tech ecosystem and we love the operational drive and capabilities of German entrepreneurs. Auto1 has proven to be in pole position in this respect: when we invested, it was buying and selling 200 cars a month. Today it does over 200 times that amount.”
“Since joining forces with Auto1, we’ve introduced a large number of investors, who have co-led or participated in both their B and C rounds. We’ve also helped to strengthen their Board and supported the leadership team with strategic advice.”
“Today Christian and Hakan are stepping up to the next level. Having a top tier and deep-pocketed investor like SoftBank on board will give the company all the thrust it needs to realise its ambitious expansion plans, while having a large balance sheet leaves competitive entrants with too many laps to make up. Many people believe Auto1 can be a $25-50 billion business – one of Europe’s great companies. With the addition of SoftBank’s rocket fuel and vision, that’s surely only a matter of time.”