Eric Wei and Jon McNeill • October 21, 2020Perspectives
Tekion: Transforming automotive dealerships and the car-buying experience
As growth investors, Advent Tech seeks to help great teams build juggernauts…Companies with the potential to have outsized impact in their markets.
Building a breakout company requires not only a great team, but a very large market as well as breakthrough technology. When we were introduced to Tekion, the company had all of these ingredients and we knew it would be a great opportunity for Advent Tech.
Buying a car can be an exasperating experience, from haggling over price to endless paperwork and hours of time to complete the sales process. No wonder that some consumers complain they’d prefer to have a root canal than buy a car. Getting a car serviced is even more paper-based than the purchase process (and you can hear the sound of dot-matrix printers humming in the background at the service center).
It’s not just the customer experience that is bad. Dealerships are stuck with outdated technology and patchwork systems from incumbent providers that handicap business performance. Existing systems have resisted innovation and potential new challengers have been put off by the complexity of the vehicle ecosystem, the diversity of OEMs and an inability to capture data critical to the dealership function. As a result, car dealerships are trapped in yesterday’s technology and function like a land line phone vs today’s smart phone. Until now.
Advent Tech recognized the automotive dealer market was ripe for disruption. Jon McNeill, an Advisory Partner, has worked extensively in the automotive industry. He is the former President of Tesla and is a board member of vAuto, Founder & Board member of True Motion (telematics) and Founder & CEO of Sterling Collision Centers (now Service King). Advent Tech also has deep expertise in SaaS platforms that have delivered superior agility to disrupt legacy software vendors. The Advent Tech team saw how dated software and lack of integration in automotive dealerships had led to a poor consumer experience with dealers frustrated by the inflexibility of current DMS vendors.
The founders of Tekion, Jay Vijayan and Guru Sankararaman, are former Tesla executives who built the systems that are the foundation of the Tesla retail experience. They had a vision they could transform the experience of buying a car, servicing a car and customer engagement as well as addressing the top pain points for dealers.
What Tekion has built is a cloud-native, end-to-end automotive retail and service platform, including all functionalities of a dealer management system (DMS). Powered by a user-led approach.
Tekion is easy to use and can replace legacy systems in just a matter of days (including training). In addition, the platfrom gets smarter over time by leveraging machine learning and IoT. It seamlessly connects the customer, car manufacturers (OEMs) and dealer, enhancing operations and eliminating friction in the customer journey.
It provides open APIs and gives dealers access to their own data to glean valuable insights that improve the customer experience. And larger dealers can access enterprise scale features to manage multiple applications such as centralized accounting, a highly secure data repository and ability to access data from anywhere.
We believe Tekion’s economics are compelling to dealers, offering better value than incumbent technology with more competitive billing rates and greater flexibility including 30-day cancellation notices and zero integration costs. We were so impressed by Tekion that Advent Tech moved quickly to sign a term sheet for $150 million in growth equity to lead the company’s Series C.
Tekion has momentum and dealers are moving their way. Tekion on-boarded its first dealers in Q3 2019 and the company is close to signing deals in 28 states across the country with dealers of all sizes, including some of the largest groups, given ease of transition, lower costs and functional superiority. Tekion’s Automotive Retail Cloud already integrates with 17 OEM brands and the company is targeting to complete remaining OEM integrations in early 2021.
Tekion exemplifies Advent Tech’s mission to partner with disrupters and help them become market leaders. Most importantly, we believe Tekion’s leadership is uniquely world-class and capable of tackling this market. Tekion will have access to a wealth of sector expertise and operating resources at Advent International and potential additional capital as and when it is needed to scale the business to become the market leader in the category.
Tekion is a landmark growth equity investment for Advent Tech and we are delighted to join the Tekion board and have the company in the Advent Tech portfolio. We look forward to partnering with Jay, Guru and the Tekion team to continue disrupting how dealers operate and raising the bar for what the auto retail experience can be.