Octane raises an additional $ 52 million for its powersports purchase financing platform
The motorsport market (jet skis, motorcycles, ATVs, etc.) is expected to exceed $ 50 million per year by 2027. 80% of purchases in this market require financing. Octane is a point-of-sale platform that enables powersports dealers and brands to provide automated financing solutions to their customers to close deals. The company’s end-to-end platform covers all aspects of the lending process from inception to closing. Initially, a marketplace for connecting lenders and buyers, Octane launched its own lending unit, Roadrunner Financial, in 2016. To support the end-to-end shopping experience for consumers, the startup also operates a number of editorial-focused content destinations. content for motorsport enthusiasts. Octane currently works with over 3,800 dealers and directly with approximately 50 brands, supported by a rapidly growing team of over 300 people.
AisleWatch met the CEO and co-founder Jason guss to learn more about the huge funding opportunity in the powersports market, the company’s strategic plans, the latest funding round, which brings total equity raised to $ 192 million, and much more .
Who were your investors and how much did you raise?
We secured $ 52 million in Series D financing, bringing Octane’s valuation to over $ 900 million. Progressive investment company, a member of the Progressive Insurance group, led the round, with the participation of existing investors Valar Ventures, Upper90, Contour Venture Partners, Citi Ventures, Third Prime, and Park wood, as well as new investors Gaingels and LIVING.
Tell us about the product or service offered by Octane.
Octane’s mission is to connect consumers to their passion, starting with our domestic powersports market (motorcycles, ATVs, UTVs, etc.). We do this by providing resellers, consumers and manufacturers with products that support them throughout the consumer buying journey, from online discovery to financing at the point of sale.
Octane reaches millions of enthusiasts through editorial brands like Cycle World and UTV Driver, helping consumers buy their favorite products by prequalifying them on dealer and OEM websites. Our team is revolutionizing lending in underserved verticals that account for tens of billions of dollars in annual transactions.
What inspired the start of Octane?
Octane was founded in 2014. We started with a simple goal: to improve lending in neglected markets. Our journey began with creating a lender market to streamline retail financing in the powersports category. We quickly learned that as the $ 21 billion powersports market grew, the buying journey was interrupted beyond just financing. We’ve elevated our goal of creating an end-to-end purchasing solution that includes editorial content, consumer prequalification tools, instant full-spectrum financing, and digital transaction closing. Our mission to connect people with their passion was born.
Since loans are involved in about 80% of powersports purchases and about 80% of loans take place at the dealership, we focused first on creating a lending platform for them. dealers and consumers. In 2016, we launched Roadrunner Financial, a 100% owned and operated lender, to improve the customer shopping experience by offering full spectrum loans and expanding access to credit, and accelerating transactions through to digitization and automation. Our product is developing rapidly in the market and we now have 3,800 partner dealers.
With a foothold in dealerships, we have broadened our scope to add value to consumers who are at the start of the buying cycle. In 2020, we acquired Cycle World and UTV Driver along with 5 other Bonnier brands with the goal of inspiring and educating motorsport enthusiasts across the country. That same year, we launched Octane Pre-qual, which allows consumers to instantly pre-qualify for financing on OEM and dealer websites, all with soft credit. We help consumers navigate to a dealership, complete their loan and complete their purchase.
We’re growing dramatically because we’re making transactions faster and easier for consumers and dealers to complete. We are the only platform to offer end-to-end purchasing benefits in the markets in which we operate.
Going forward, Octane plans to enter other passionate buying markets and continue to launch purchasing solutions and customer engagement tools while driving incremental growth for dealers and OEMs. We define a passion buy as a major discretionary buy that makes people happy.
Most of the innovations and investments are concentrated in large, reputable markets such as small business, automotive, homes, etc. We have recognized that there is a significant opportunity to deliver innovative, technology-driven buying and lending solutions in underserved markets.
How has COVID-19 impacted the business?
We were very lucky in the way we lived during the pandemic. There are several reasons for this:
- The powersports market has seen increased demand due to COVID, as discretionary spending has been moved from travel, dining and hospitality to major leisure purchases. In fact, the powersports industry saw double-digit growth last year.
- Our customer base has not been significantly impacted by COVID economically, so consumer demand and loan performance has remained strong.
- We have an experienced risk management team and a flexible proprietary loan origination system that has allowed us to adjust underwriting to cope with the changing environment.
- We have focused on our OEM and dealer partners and their customers, which has enabled us to further strengthen our relationships and increase our market share.
All of this has enabled Octane to grow responsibly throughout 2020 and put us in a position to accelerate growth in 2021.
What factors related to your business caused your investors to write the check?
Our investors fully believe in our mission. Some of the factors that have led to continued support from our investors include:
- The exceptional people of Octane. We currently employ 335 people; we have hired over 100 in the past year alone and continue to recruit top talent.
- We improve the shopping experience for customers by offering full spectrum loans and expanding access to credit and accelerating transactions through digitization and automation
- Expected to generate over $ 1 billion in the next 12 months
- We have doubled our revenue every year with over $ 100 million in revenue forecast for 2021
- Positive net income and operating cash flow
- Top investment grade AAA and AA ratings of KBRA and Standard & Poor’s, respectively, on certain of Octane’s outstanding Class A securitization notes
What are the milestones you plan to achieve over the next six months?
Over the next six months, we plan to continue Octane’s mission of connecting people with their passions by providing innovative discovery and research tools, responsibly increasing access to competitive funding, and digitizing and automating the transaction process. The new capital will be used to evolve our purchasing tools for consumers who shop online, expand our family of 3,800 dealer partners and 48 OEM and brand partners – which include BRP, Suzuki and Triumph Motorcycles – and s’ expand to other passionate buying markets.
With the enormous growth of the company, hiring will also be a priority for us in the short term. We are a remote workplace first with offices in New York and Dallas and have grown our team by 50% over the past year from 213 to 336 employees. Our management team strongly believes in the value of investing in the people of Octane to drive long-term growth. With solid perks like a generous PTO, 401,000 contributions, and a remote work environment first, as well as culture building programs like the ‘gift of the month’, resource groups for them. employees, team-based fitness and meditation classes, and more, Octane continues to focus on making the company a great place to work.
What is your favorite open-air restaurant in New York
that of Raoul.
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