SlideShare a Scribd company logo
2011-2012   Dealer Draw, LLC privately-held company in Sandy, UT
Central Order Book for Used Vehicles
       -Parallel to ECN for NY Stock Exchange-




                                       Brokers
        Wholesalers                               Credit Agencies


Independent                                                               Rental Car
Dealerships                                                               Companies




 •Currently > 100,000 vehicles sold each day; Estimate volume growth 3-5x
 •Physical and geo-regional auction houses are dead in near future
 •Anonymity is key development from current structure
 •Aggregation and automation through technology
 •Current auctions are anachronistic – sequentially with lanes and auctioneer
 •DealerDraw auctions pool liquidity into time slots with categories of vehicles
Team
• Deep experience in moving products from human
  brokered markets to electronic screens.
• We are disrupting the car space after considerable research because it is
  most lucrative (>$1000/vehicle in transaction costs) and ripe. Specialty
  cars and salvage cars are already electronic.


• Alex Kiss
    – 15 years building enterprise software for trading FX options. Multi-Trillion dollar
      industry.
    – Entrepreneur- Founded Myrias. Electronic exchange for insurance securities.

• Scott Putnam
    – Built commodity trading models on wall street
    – Phd- Geophysics
    – Brought new products to Chicago Merchantile Exchange (weather derivatives)
ECN: Electronic Commercial Network
Similar vehicles are pooled together to generate buyer demand.
      Example:
      Ford F-150 sell at same time [4-4:15pm EST] each day, rather than sequentially selling each
         car during a 30 seconds window.

The frequency of the auction is determined by the “liquidity” or commonness
   of the vehicle.
• All buyer bids are firm and anonymous. Creates serious interest only.
• Sellers are not-anonymous and place a non-disclosed reserve price on
  each vehicle. However their feedback is transparent and shows the
  average daylight between their reserve price and NADA/MMR values.

• Failed Dealer-to-Dealer marketplaces:
Not anonymous- phishing for human brokering. Terrible pricing.




                                                      DealersLink
How to get initial supply on the order book?




         Auction aggregation, integrated search engine and buying service


              Used Dealership Inventory
                         Retailing and wholesaling everyday



iPad listing app with wireframes          Network effect starting with ~1000 dealerships
Entering the Dealership Castle




Aggregated auction buying service is “pain point” for dealerships
Marketing
• Commission-based sales agents.
• DealerDraw’s monthly subscription fee [$99-
  $499] is designed to fund sales/marketing and
  get to a critical mass of Dealerships.
• TrueCar signed up 5000 dealers in 2-3 years
• DealerDraw’s enterprise value is derived from
  transactional volume.
Risks
• Dealer’s won’t buy electronically?
  – Zero to 40% in 4 years at Simulcast
• Dealer’s won’t place cars on DD network?
  – Requirement of DD. We will iterate & learn
• Manheim sends cease and desist?
  – Align with smaller auction, maybe large supplier
    (Enterprise), be scrappy.
Current Status and Financials
•   Pre-revenue.
•   Interactive pro-forma with assumptions tab
•   Raising $500k capital
•   Looking for Strategic Partner

• Summary Memorandum available upon request

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DealerDraw pitch

  • 1. 2011-2012 Dealer Draw, LLC privately-held company in Sandy, UT
  • 2. Central Order Book for Used Vehicles -Parallel to ECN for NY Stock Exchange- Brokers Wholesalers Credit Agencies Independent Rental Car Dealerships Companies •Currently > 100,000 vehicles sold each day; Estimate volume growth 3-5x •Physical and geo-regional auction houses are dead in near future •Anonymity is key development from current structure •Aggregation and automation through technology •Current auctions are anachronistic – sequentially with lanes and auctioneer •DealerDraw auctions pool liquidity into time slots with categories of vehicles
  • 3. Team • Deep experience in moving products from human brokered markets to electronic screens. • We are disrupting the car space after considerable research because it is most lucrative (>$1000/vehicle in transaction costs) and ripe. Specialty cars and salvage cars are already electronic. • Alex Kiss – 15 years building enterprise software for trading FX options. Multi-Trillion dollar industry. – Entrepreneur- Founded Myrias. Electronic exchange for insurance securities. • Scott Putnam – Built commodity trading models on wall street – Phd- Geophysics – Brought new products to Chicago Merchantile Exchange (weather derivatives)
  • 4. ECN: Electronic Commercial Network Similar vehicles are pooled together to generate buyer demand. Example: Ford F-150 sell at same time [4-4:15pm EST] each day, rather than sequentially selling each car during a 30 seconds window. The frequency of the auction is determined by the “liquidity” or commonness of the vehicle. • All buyer bids are firm and anonymous. Creates serious interest only. • Sellers are not-anonymous and place a non-disclosed reserve price on each vehicle. However their feedback is transparent and shows the average daylight between their reserve price and NADA/MMR values. • Failed Dealer-to-Dealer marketplaces: Not anonymous- phishing for human brokering. Terrible pricing. DealersLink
  • 5. How to get initial supply on the order book? Auction aggregation, integrated search engine and buying service Used Dealership Inventory Retailing and wholesaling everyday iPad listing app with wireframes Network effect starting with ~1000 dealerships
  • 6. Entering the Dealership Castle Aggregated auction buying service is “pain point” for dealerships
  • 7. Marketing • Commission-based sales agents. • DealerDraw’s monthly subscription fee [$99- $499] is designed to fund sales/marketing and get to a critical mass of Dealerships. • TrueCar signed up 5000 dealers in 2-3 years • DealerDraw’s enterprise value is derived from transactional volume.
  • 8. Risks • Dealer’s won’t buy electronically? – Zero to 40% in 4 years at Simulcast • Dealer’s won’t place cars on DD network? – Requirement of DD. We will iterate & learn • Manheim sends cease and desist? – Align with smaller auction, maybe large supplier (Enterprise), be scrappy.
  • 9. Current Status and Financials • Pre-revenue. • Interactive pro-forma with assumptions tab • Raising $500k capital • Looking for Strategic Partner • Summary Memorandum available upon request