Vroom

Vroom was an online used car marketplace that went public in June 2020.²¹³¹⁴ In January 2024, Vroom announced it would wind down its ecommerce used-vehicle business and pivot to focus on auto financing and AI-powered analytics.¹²³⁴ The company laid off about 800 employees, or 90% of its workforce, as part of the shutdown.²³⁴

Timeline

Money raised

Vroom raised a Series A round of $6.42 million in June 2013.¹⁴ Vroom raised a Series B round of $11.71 million in November 2014.¹⁴ Vroom raised a Series C round of $54.21 million in July 2015.¹⁴ Vroom raised a Series D round of $95 million in December 2015.¹⁴ Vroom raised a Series E round of $50 million in September 2016.¹⁴ Vroom raised a Series F round of $108.36 million in November 2017.¹⁴ Vroom raised a Series G round of $146 million in August 2018, led by AutoNation.⁹¹⁴ Vroom raised a Series H round of $254.37 million in December 2019 at a $1.51 billion valuation, led by Durable Capital Partners.¹¹¹⁴ Vroom raised $468 million in its IPO in June 2020.²¹³ Vroom raised $588.6 million in a post-IPO equity round in September 2020.⁹ Vroom's total funding was $1.46 billion according to Clay.⁹

Investors named in the sources: General Catalyst⁵⁸¹⁴, T. Rowe Price⁵⁸¹⁴, Altimeter⁵⁸, AutoNation⁹¹⁴, Durable Capital Partners⁹¹¹¹⁴, L Catterton⁹¹⁴, Pico Partners¹⁴, Constitution Capital Partners¹⁴, Allen & Company¹⁴, Alpha Venture Partners¹⁴, Foxhaven Asset Management¹⁴, Catterton Partners¹⁴.

What happened

Vroom was founded in 2013 as an online used car buying and selling platform.³⁹¹⁴ Vroom was established by American entrepreneurs, and later Israelis Elie Wurtman and Allon Bloch took it over.³ Vroom raised venture funding from investors including General Catalyst, T. Rowe Price, and Altimeter.⁵⁸ Vroom acquired Texas Direct Auto in 2015.⁸ Vroom acquired some assets from Beepi after Beepi shut down in 2017.⁵⁸

In March 2018, Vroom laid off staff and closed locations in Dallas, Texas and Whitestown, Indiana.⁵⁸ Vroom's CEO Paul Hennessy said the company was not a marketplace but bought, reconditioned, and resold cars.⁵⁸ Vroom went public in June 2020, raising $468 million in its IPO.²¹³ Vroom's share price more than doubled on its first day of trading.² Vroom's share price hit a high of $65.01 in August 2020.²

Vroom's market valuation peaked at over $8 billion in August 2020.³ Vroom acquired Vast Holdings, which included CarStory, for $120 million in cash and stock.² Vroom acquired United Auto Credit Corporation for $300 million in cash in October 2021.² Vroom's share price dropped more than 60% over the year following August 2020.² By 2022, Vroom shares fell to under $2.²

On January 22, 2024, Vroom announced it would wind down its ecommerce used-vehicle business.¹²³⁴ Vroom suspended all used car transactions through vroom.com.²³⁴ Vroom planned to sell its used vehicle inventory to wholesalers.²³⁴ Vroom said it had not determined how much the wind-down would cost.²⁴ Vroom laid off about 800 employees, or 90% of its workforce.²³⁴

Vroom continued to operate United Auto Credit Corporation (UACC) and CarStory.²³⁴ Ally Bank and Ally Financial suspended the credit line for vehicle purchases, so Vroom could not buy more vehicles.⁴ Vroom's stock closed at $0.53 on Monday, January 22, 2024, and dropped to $0.25 after the announcement.² Vroom's market cap was $75 million at the end of trading on Monday, January 22, 2024.³ In July 2024, the FTC announced a proposed settlement requiring Vroom to pay $1 million to refund consumers harmed by its practices.¹⁶

On November 12, 2024, Vroom announced an equity-for-debt recapitalization and intent to file a prepackaged Chapter 11 plan.¹⁸ Vroom's outstanding funded debt consisted of approximately $290 million of unsecured convertible senior notes due in 2026.¹⁸ Vroom intended to voluntarily file a prepackaged plan of reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas.¹⁸ Vroom anticipated emerging from the prepackaged Chapter 11 case at the end of 2024 or early 2025.¹⁸ Under the restructuring, existing common stockholders would own approximately 7.06% of the new common stock.¹⁸

Holders of the unsecured notes would own approximately 92.94% of the new common stock.¹⁸ Vroom did not anticipate that any creditors other than holders of the unsecured notes would be affected.¹⁸ Vroom intended to utilize a substantial portion of its approximately $1.5 billion in federal tax net operating losses after emerging from Chapter 11.¹⁸ On March 19, 2025, the Court entered an order granting Vroom's motion to dismiss all claims in a securities class action.¹⁷

Legal outcomes

• settledThe FTC announced a proposed settlement requiring Vroom to pay $1 million to refund consumers harmed by its practices.¹⁶
• filedA securities class action lawsuit was filed against Vroom, Inc. on behalf of shareholders.¹⁴
• dismissedOn March 19, 2025, the Court entered an order granting Vroom's motion to dismiss all claims in the securities class action.¹⁷

Where the founders are now

Tom Shortt was the Chief Executive Officer of Vroom as of November 2024.¹⁸ Vroom was founded in 2012 by Thomas Shortt according to Forge.¹⁴

Sources

1. Test Your Idea in 120s — Free AI Startup Validator | IdeaProof, IdeaProof.io, Nov 30, 20
2. Vroom hits the brakes on its online used car business to go full throttle on auto financing and AI | TechCrunch, TechCrunch, 2024-01-23
3. Vroom laying off 90% of workforce, shutting down used-vehicle platform | CTech, ctech, 2024-01-23
4. Another Online Used-Car Dealer Bites the Dust: Vroom, 3.5 Years after Red-Hot IPO, Shuts Down as Ally Suspends Credit Line | Wolf Street, wolfstreet.com, Jan 23, 20
5. Lemon Law News - Used Car Startup Halts Dallas Operation, Allen Stewart PC, 2018-04-02
8. Used car site Vroom lays off staff, 25%-50% says source, as it halts Dallas and Indiana operations | TechCrunch, TechCrunch, 2018-03-06
9. How Much Did Vroom Raise? Funding & Key Investors | Clay, clay.com
11. VC Daily: Vroom Valued at $1.5 Billion; Indio Sale Brings ..., wsj.com, Dec 6, 201
13. Used-car platform Vroom hits $5B value in trading debut, autofinancenews.net
14. Vroom IPO Timeline and Financing Details - Forge, forgeglobal.com
16. FTC Takes Action Against Online Used Car Dealer Vroom for Deceiving Customers, Failing to Deliver on Time and Provide Required Disclosures, Federal Trade Commission, 2024-07-02
17. Commitments and Contingencies, sec.gov
18. Vroom Announces Equity-for-Debt Recapitalization | Vroom, Inc., Vroom, Inc., Nov 12, 20

How this case file was put together

Every statement on this page carries a numbered note, and every note points to a court record, a regulatory filing or a named publication in the list of sources. Each statement was checked against the text of the sources it cites before it was published: a figure, a date or a name the cited source does not contain was cut rather than kept. Allegations are shown as allegations, with their status at the time of the source (filed, charged, convicted, pleaded, settled, dismissed or pending). Quoted lessons are the words of the person or publication named with them, copied from the cited source; nothing here is our own opinion of why the company failed.

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