Reynolds and Reynolds has made a direct equity investment in The Appraisal Lane as part of a strategic partnership between Reynolds and the real-time used-car trade network/communications platform.
The partnership announced Monday also includes a credit facility for car buying and selling, The Appraisal Lane said.
Additionally, there is also a board of managers for the partnership, which includes:
- Robert Burnett, senior vice president of corporate development at Reynolds
- Trey Hiers, vice president of business development at Reynolds
- Jeff Risner, co-founder and chief executive officer at The Appraisal Lane
- Andrew Iorgulescu, co-founder and president at The Appraisal Lane
- Chris Tomchay, co-founder and chief operating officer at The Appraisal Lane
“This partnership positions us for future growth with access to a broader range of dealers across the U.S. It also enables us to continue to strategically manage and guide the company in product and business development,” Iorgulescu said in a news release. “We look forward to expanding the reach of our dealer community and helping even more dealers grow their retail operations.”
Burnett added: “We’re excited to partner with The Appraisal Lane team in offering an effective platform that helps automotive retailers streamline the used-car appraisal process and obtain real-time access to expert, trustworthy cash offers for trade-in vehicles.
“This is one more example of Reynolds’ ongoing commitment to helping automotive retailers operate more efficiently and profitably while, at the same time, improving the overall car-buying experience for dealership customers.”
In a phone interview with AuSM, Iorgulescu shared more details about how the partnership came to be and The Appraisal Lane’s plans with the investment.
How deal came about
Monday’s news comes after roughly a year of conversation between the two companies, Iorgulescu said.
About a year ago, The Appraisal Lane decided to seek financing to help the business grow. The company began building the platform in 2013, and that continued for most of 2014 before testing began in 2015.
“In 2016, we’ve started, really, as you would say, pouring gas on the fire a little bit,” Iorgulescu said. “And so we decided to go out and look for some financing to help us do that.”
The Appraisal Lane raised a bit of money, he said, in a “friends and family” round of investment from friends of the company or people in the car business they knew.
Another route they explored was strategic partnerships.
The company presented at the AutoVentures Conference last year, which was the first time that Reynolds — or anyone, really — had the chance to really experience the product, he said.
The Appraisal Lane continued conversations with Reynolds at NADA and beyond, and had talks with other parties, as well.
“They’re a perfect fit for us and what it is we’re trying to get done,” Iorgulescu said of Reynolds. “And we could not be more excited to be working with them.”
Plans going forward
The Appraisal Lane, Iorgulescu said, is still in early stages. It’s a start-up, after all.
“We started it from scratch. We’ve been scratching and clawing and in the building stage; we were in that process of defining and validating and designing our solution over the last couple of years,” he said. “Now we’re kind of in that stage where we can slowly start to grow, methodically, our business.
“And having a partner like Reynolds that is just so embedded in the automotive space … I just couldn’t even describe how many different ways that we could potentially work with Reynolds,” he said.
Given the size differences in the two companies, Iorgulescu said they will be very methodical in their approach. Currently, The Appraisal Lane is operating in the Northeast and Southeast and is working to increase its presence the Mid-Atlantic.
Next on the list is Texas followed by the Midwest.
“We’re working our way from east to west,” he said. “We were doing that — bootstrapping it — before. Now we have an investment from Reynolds, we have a credit facility that Reynolds is providing for us to help us with the buying and the selling of vehicles.”
The previous credit facility that The Appraisal Lane had was “much, much smaller and on different terms” with a midsize dealer group partner.
While the focus for now will be on the equity investment, the credit facility and growing the business in the near-term, Iorgulescu sees the possibility of more collaboration between the companies in the longer term, especially given all the areas of the car business in which Reynolds works.
“Just in the sheer reach of, over time, educating people that work at Reynolds about The Appraisal Lane solutions, there’s just a side effect that we can get from that,” he said. “On top of that, there are a number of processes that we touch inside the dealership that Reynolds touches, as well, or even (that) Reynolds handles inside the dealer’s retail management system.”
When asked if this partnership could lead to expansion in the products and services that The Appraisal Lane offers, Iorgulescu said there is “absolutely” potential for growth.
In fact, there have already been discussions about “the other products that we could either do together or that could be facilitated by sister businesses of Reynolds or things that we could do to facilitate things that Reynolds might be planning to do,” he said.
“So, absolutely, there are additional products that we’ll be talking about in the future and working on together,” Iorgulescu said. “There’s no doubt about that.”