(Bloomberg) — Tekion, a cloud-based automotive software provider, has more than tripled its valuation to $3.5 billion after raising $250 million from investors including Durable Capital Partners and Alkeon Capital Management LLC.
Hyundai Motor Co. and existing investors Advent International and Index Ventures also participated, Tekion Chief Executive Officer Jay Vijayan said in an interview. “This funding is a significant validation. It puts us in an extremely strong position and we’ll look to accelerate growth,” he said.
Pleasanton, California-based Tekion plans to add larger automotive vehicles such as RVs and boats to its platform. It is set to expand both domestically and internationally, beginning with France by the second quarter of 2022, followed by the U.K. and Germany, Vijayan said.
Founded in 2016, the startup seeks to enable automakers and their retailers to sell and service cars in a way that reduces friction for consumers, in part by eliminating what can be a “grueling” amount of time in a dealership, according to Vijayan. He’s a former executive at Tesla Inc., which sells electric vehicles directly to consumers.
“We think Tekion has the potential to build a large platform as automobiles and automobile retailing are fundamentally changing,” Durable’s chief investment officer, Henry Ellenbogen, said in an interview.
“The way manufacturers and their dealer networks need to interact with end consumers also needs to change,” Ellenbogen said, comparing Tekion’s disruption opportunity to that of Toast Inc., a restaurant software provider he backed in 2018 during his tenure at T. Rowe Price. Toast, which went public last month, has a market capitalization of almost $26 billion — a substantial multiple of the $1.4 billion it was valued at when T. Rowe invested.
“Together, we are poised not only to embrace the future but chase it,” Manish Mehrotra, an executive director at Hyundai Motor North America, said in an emailed statement. “Hyundai and Genesis are excited about this strategic investment and partnership with Tekion,” he said, referencing the carmaker’s upscale brand.
Tekion is set to shake up an industry “primarily served by archaic technology provided by legacy incumbents,” Deepak Ravichandran, general partner at Alkeon Capital, said in an emailed statement.
Last October, the company was valued over $1 billion after raising funding from Advent, Index Ventures, Airbus Ventures and Exor, a holding company affiliated with Fiat Chrysler Automobiles and Ferrari.
Tekion facilitates online orders of General Motors Co.’s Chevrolet Bolt electric vehicle, Vijayan said. GM, BMW i Ventures and Nissan-Renault-Mitsubishi’s Alliance Ventures are among the company’s earlier investors.
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