CoPilot, based here and in Austin, Texas, announced that it raised $10 million in venture capital, bringing outside funding to $17 million. Chicago Ventures, where Ryan was chairman, was a seed investor and participated in the latest round.
The new $10 million “will fund growing customer base via continued product innovation and engineering and product management hires,” Ryan said.
A fixture on the local tech scene and an initial investor in Shiftgig and other startups, Ryan hopes cars are only the first big-ticket item for CoPilot. It could expand into homeowners and renters insurance and eventually into the fragmented homebuying market, he says.
But first: “We’ve got a long way to go in cars,” he says, citing a $1.2 trillion retail market with 57 million new and used vehicles sold annually. “There’s no bigger vertical than that.”
Still, the field of buyer helpers is already crammed. They include online-shopping sites like Cars.com, Kelley Blue Book and Autotrader, plus other resources like Consumer Reports, Edmunds, TrueCar and J.D. Power.
Ryan’s differentiator, he says, is CoPilot’s business model that eschews payments (and potential influence) from car dealers and instead opts for revenue from sales of car insurance policies and, eventually, other products to customers.
“All we’re doing is carving out a niche in the car buyers’ universe,” he says, primarily Gen Xers and millennials and whoever is undergoing a “life transition”—like becoming parents—that imposes a transit overhaul.
Through a CoPilot app, consumers can lay out their predicament and preferences and what they think they can afford among a dizzying range of choices provided by 6 million cars listed online. There’s an option to initiate a chat with a CoPilot employee. As consumers swipe left or right on offerings, software “curates” what’s presented, tailoring the menu.
The app was introduced last October after work on data platform began in 2015 and private beta testing in 2018.
CoPilot has about 500 customers, he said, with the company relying on word-of-mouth rather than spending resources on advertising and marketing.
CoPilot’s competition, Ryan says, are “power tools for people who know something about cars or know what they’re looking for. Almost all of (the providers) make money off the dealer. That’s a very lucrative business model.” He acknowledges, “Maybe it’s a mistake for us not to do it.”
A spokeswoman for Atlanta-based Cox Automotive, which owns Autotrader, Kelley Blue Book and other brands, says the company would not comment on Ryan’s views or CoPilot’s approach.
CoPilot’s latest funding was led by Next Coast Ventures and included investments from Max Levchin’s SciFi Ventures and Arthur Patterson, co-founder of Accel Partners. Existing investors in addition to Chicago Ventures also participated.
Ryan says more money will be needed but not until 2022, when he envisions raising $25 million to $50 million. The company has 20 employees, with nine in Chicago, eight in Austin and three in San Francisco.