Most of the time when people take out loans, it is for major purchases, such as a home or car.
But not all big purchases are a must. Some are more for fun, and the financing options for those types of purchases, such as motorcycles and ATVs, are more limited. Today, Octane Loans, a company that embarked on seven years ago to remedy that, announced that it has raised $ 52 million in a Series D funding round that values the company at more than $ 900 million.
Offering “instant” financing for large recreational purchases, the company has impressive finances in a world of startups whose inhabitants are largely unprofitable. On the one hand, Octane has net income and positive operating cash flow, and expects to generate more than $ 1 billion in the next 12 months. It has been doubling revenue annually, and CEO and co-founder Jason Guss projects that the company will make “more than $ 100 million in revenue” this year. Its valuation is now “more than double” what it was at the time of its July 2020 analysis. Raising $ 25 million, according to Guss.
Progressive Investment Company Inc., a member of the Progressive Insurance group, led its latest funding, which included participation from existing backers Valar Ventures, Upper90, Contour Venture Partners, Citi Ventures, Third Prime and Parkwood, as well as new investors Gaingels and ALIVE. . .
With the latest round, New York-based Octane has raised more than $ 192 million in total equity funding since its inception in 2014.
Octane was launched with the goal of “improving lending in overlooked markets,” according to Guss. Specifically, Octane initially set out to build a lender market to streamline retail financing in the motorsports category. In a nutshell, I wanted to help people who want to buy things like motorcycles, snowmobiles, jet skis, and ATVs get the financing they need to do so.
“We quickly learned that the buying journey in the motorsports markets was broken beyond funding,” Guss told TechCrunch. “We raised our goal of creating an end-to-end purchasing solution that includes editorial content, consumer prequalification tools, instant full-spectrum financing, and digital deal closing.”
Because loans are involved in roughly 80% of powersports purchases and roughly 80% of loans are made at the dealership, Octane first focused on building a dealer and consumer lending platform. Then, in 2016, it launched Roadrunner Financial, a fully owned and operated lender, so it could offer full spectrum loans, “expanding access to credit and accelerating transactions through digitization and automation.” Today, the company is associated with 3,800 distributors.
With an anchor in dealerships, Octane later expanded its reach. Last year, it acquired Cycle world Y UTV driveralong with five other Bonnier brands with the aim of “inspiring and informing motorsport enthusiasts across the country.” Also last year, it launched Octane Pre-qual, which allows consumers to instantly pre-qualify for financing on OEM and dealer websites with soft credit. With that offering, Octane aims to help consumers navigate to a dealership, close their loan, and complete their purchase in one place.
“We are growing dramatically because we make transactions faster and easier for consumers and dealers to close,” said Guss. “We are the only platform that offers end-to-end buying benefits in the markets in which we operate.”
Going forward, Octane plans to use its new capital to expand into adjacent “other exciting shopping” markets and continue to launch customer engagement tools as well as shopping solutions for consumers who purchase motor sports vehicles online. It also wants to continue adding dealerships, OEMs, and brand partners, which currently include BRP, Suzuki, and Triumph Motorcycles.
“We define a passionate purchase as an important discretionary purchase that brings joy to people,” said Guss. “Most of the innovation and investment is concentrated in large and prominent markets, such as small businesses, the automobile and the home. ”As people spent less on traveling and eating out once the COVID pandemic hit- 19, the motorsports market got a boost, growing by double digits last year, Guss noted.
“Our core customer base was not significantly financially impacted by COVID, so consumer demand and loan performance remained strong,” he said.
Andrew Quigg, Chief Strategy Officer, Progressive Insurance believes that technology and consumer needs continue to evolve.
“Octane’s point-of-sale loan origination platform provides benefits to consumers and dealers in a niche segment of the loan market, ”he said. “We like to partner with forward-thinking and innovative companies and we believe that our investment in Octane aligns very well with this strategy.”
Octane describes himself as a remote workplace that has offices in New York and Dallas. He has grown his team by 50% in the last year, from 213 to 336 employees.