Historic $1.8M pre-seed round revs up automotive startup with former BacklotCars VP behind the wheel

AUnders Ericson is tackling an overlooked issue in the automotive industry, he shared, and investors are not missing out on the opportunity to back up his solution.

“There is this glaring problem in the market where people with subprime credit, who are trying to buy a car, are going into these specialized dealerships and paying double what a vehicle is worth — and they’re getting hit with 25 percent interest on top of that. They are being set up to get their car [repossessed]. It’s a bad situation and an endless cycle of debt,” said Ericson, founder and CEO of Whipz.

Whipz is a digital retailer, specializing in higher-mileage, affordable cars.

“We’re focusing on streamlining access to financing for people with subprime credit or a thin credit profile,” Ericson explained, noting that all vehicles are priced at $20,000 or less with more than 100,000 miles — a mileage range that other online used car dealerships don’t touch.

All vehicles go through a strict inspection and reconditioning process; and customers have five days or 250 miles to test drive the vehicle, he noted.

Click here to check out Whipz and its inventory.

Ignition switch

Ericson started to familiarize himself with the automotive industry when he joined the dealer-to-dealer automotive platform BacklotCars team back in 2015 as vice president of sales, he recalled. When BacklotCars exited for a historic $425 million deal in 2020, Ericson had the knowledge and resources to go on and create his own startup.

Whipz officially launched earlier this month, with a $1.8 million pre-seed round already finalized. It is believed to be the largest pre-seed round in Kansas City history, Ericson said. The funding round was backed by four venture capital funds — M25, KCRise Fund, Lancaster Investments and Nelnet — as well as supporters from the BacklotCars community, Ericson said.

“We had a goal of $1.5 million, and then we were oversubscribed,” Ericson noted. “We actually ended up turning down some money later too. But we had some late entrants who we really wanted to get on our cap table, so we got them in. … We probably wouldn’t have been able to do it without the Backlot[Cars] story.”

Some of Whipz’s investors are individuals who passed on investing in BacklotCars and didn’t want to miss this opportunity, Ericson said.

Click here to read more about BacklotCars’ $425 million exit and what led its founders to success.

Having the support of four VC funds is key, he continued.

“Because if we need an extension round before our [seed] round of funding, a fund is able to write a large check for an extra six months or year of money,” Ericson explained. “A lot of early stage startups don’t have that luxury. The other benefit of it is, once we get into our Series A, they have a lot of great connections with larger funds to help close that funding round.”

Taking a page from what Ericson learned during his time at BacklotCars, he is focused on aggressively hiring a strategic team early on, he shared. Out of his growing team of 10, the transportation team is made up of individuals who previously worked at BacklotCars.

“Sean Hampton is our VP of Logistics and he really scaled the entire transportation team at BacklotCars,” Ericson said. “…And then Kelli Gray was the number one transport manager on the team and has a great logistics team. We’ve done a really good job of pitching our vision to potential employees and have a lot of smart people on board — and know there’s a lot more talent here in Kansas City.”

Into higher gear

The $1.8 million in funding will be used to continue hiring and training employees, as well as perfecting processes, Ericson said.

“We know that early on, there’s going to be a lot of things we do wrong, and it’s going to change on the fly,” he said. “But it will lead us to finding the best strategies for our sales process and marketing avenues.”

Within its three weeks of operating, Whipz has sold a handful of vehicles across multiple states, Ericson said.

We’re not just selling our cars in Kansas City. Our first car was shipped off to Manhattan, Kansas, then East St. Louis, Branson and Arkansas,” he said. “It shows the reach that this company has.”

Ericson, who grew up in Wisconsin and previously worked in San Francisco, ultimately decided to build his company in Kansas City because of the talent and entrepreneurial support system, he shared.

“It’s a hidden gem to those outside of Kansas City,” Ericson said. “The people are so welcoming, and everyone wants you to succeed. It’s rare for people to be so loyal.”