October 22, 2020 — Dealership technology vendor Tekion Corp. announced this morning it has raised $150 million in a recently completed Series C round led by Advent International.
Other investors in the latest round are Index Ventures, Exor (the holding company of Fiat Chrysler Automobiles and Ferrari), Airbus Ventures, and FM Capital, which includes a large number of top 100 dealers in the country as limited partners.
The $150 million investment pushes the technology startup’s valuation to approximately $1.1 billion. (Read the press release here).
Tekion is a startup looking to upend the dealer management system market. In total, Tekion has raised $215 million since former Tesla chief information officer Jay Vijayan started the company in March 2016 with a $3.5 million seed investment from Storm Ventures and BluePointe Ventures.
A $35 million Series B round followed in January 2018. Investors included Index Ventures, Alliance Ventures, Storm Ventures, AME Ventures, Exor, and Airbus Ventures.
Meanwhile, automaker-led investment firms General Motors, BMW i Ventures, and Nissan-Renault-Mitsubishi Alliance Ventures, along with numerous dealer groups, have invested nearly another $30 million in 2019.
(The Banks Report first wrote about Tekion in January 2019: Auto Retail’s Next Disruptor?)
From 2012 to 2016, Vijayan designed and built Tesla’s digital and information systems and software platform during the company’s early-stage through its hyper-growth phase as revenues grew from nearly nothing to more than $5 billion.
From 2016 to early 2019, wanting to stay off the radar screen of larger tech providers, Vijayan built Tekion in stealth mode. Even when the company unveiled itself in January 2019 with two investment-related press releases, Vijayan kept the startup’s true intentions vague, talking only about its digital Service Experience (dSE) platform.
Tekion continued to keep a low profile during the National Automobile Dealers Assn. convention in San Francisco in January 2019, inviting a limited number of dealers to view the product at the headquarters of Index Ventures, one of its earliest investors.
But it was clear what Vijayan had in mind. In our January 2019 article we wrote:
Tekion hasn’t raised nearly $50 million (or more) from reputable venture capital firms to only build a nicer service platform tool.
There’s a bigger play, and our guess is that it will be either in the CRM space or in the dealer management system (DMS) arena — either later this year or sometime in 2020. Vijayan has put together a company armed with money and about 150 employees — many of which are developers in India.
Later in 2019, Tekion unveiled its vision of what an automotive retail DMS should look like with its Automotive Retail Cloud. An investment and certification from General Motors that was announced in February of this year revealed Tekion has big ambitions in the DMS space that has long been dominated by CDK Global and Reynolds and Reynolds.
Tekion already is knocking down one large hurdle — that being OEM certification and integration. With 17 OEM integrations already completed, the company says it expects to have the others done by early 2021.
The company hopes to solve the issue of technology fragmentation that has plagued the industry for decades. With its modern cloud-based platform complete with a centralized accounting system built on a secure data platform, Tekion says dealers can access their company’s data from anywhere while also providing seamless access to vendors via its set of APIs.
“Tekion is the true disrupter the industry has been waiting on for decades,” said Joe Serra, an investor in the Series C round. Serra also is the president of Serra Automotive Inc., who owns 50 dealerships representing 62 franchises. “I’m very impressed with their modern DMS platform and their awesome team. I’m so convinced that their technology and vision will transform automotive retail for consumers, dealers, and manufacturers that I wanted to be a part of the change by investing in the company.”
Tekion appears to be making its play in the market at a good time. The DMS landscape likely will shift over the next few years. The open API platform is a strategy other DMS vendors such as Autosoft and Dealer Built also are moving toward. Meanwhile, CDK is trying to position its Fortellis platform as the industry standard.
Other dynamics at work are the future ownership question of Reynolds and Reynolds as its chairman and CEO deals with serious tax evasion allegations. It’s likely the tech giant will have a different owner and a much different strategic focus in the near future.
Also at play are the legal and legislative moves threatening to open data access to the Reynolds and CDK systems (Read our update: Legal and Legislative Update on the Ongoing War for DMS Data Access).
Tekion also announced this morning that Jon McNeill, former Chief Operating Officer of Lyft Inc. and former President of Global Sales, Marketing, Delivery, and Service at Tesla, joins its board of directors with Eric Wei, managing director of Advent’s technology investment team.
Advent was rumored in both 2015 and 2017 to be in the running to acquire CDK Global. This year, Ansira, one of Advent’s portfolio companies, acquired CDK’s digital marketing assets.