SEATTLE, June 30, 2020 /PRNewswire/ -- DigniFi, a financing platform for auto repairs and services, announced that it has raised $14 million in Series A funding from Austin-based BuildGroup, the permanent capital company started by Lanham Napier, formerly of RackSpace, and Exor Seeds, the venture arm of Exor N.V., the holding company of the Agnelli family (controlling shareholder of Fiat Chrysler, Ferrari, CNHI, PartnerRe, and Juventus). In addition, the company has signed an agreement with Neuberger Berman Private Equity to purchase up to $275 million of assets. The financing enables DigniFi to grow its network of 5,000 auto service centers to get Americans back on the road at a moment when automobiles are essential.
"After months of financial uncertainty, Americans are eager to get back to work, and many will need their cars in working order to do that. Our network of auto service centers has grown by 500 locations over the last 90 days, spurred by this rising demand," said Richard Counihan, CEO of DigniFi. "With BuildGroup, Exor, and Neuberger Berman backing us, we have never been in a better position to serve drivers and auto shops. Our platform will stimulate local economies and help America recover strong."
For many Americans, car repairs are a source of stress. Prior to COVID-19, a AAA survey found that 64% of Americans could not pay for an unexpected car repair without taking on debt. For perspective, the average car repair costs between $500 and $600 according to AAA. Many consumers take on high-interest credit card debt or payday loans to cover unavoidable repairs. Or, they postpone service altogether because they've already used up their credit lines on essentials like food and healthcare.
In response to COVID-19, Americans have been using public transit less often but driving more frequently. Mobility data from Apple reveals that driving has increased 14% above pre-pandemic levels as of mid-June. Indeed, the CDC recently recommended that people walk, bike, or drive to work alone, without other passengers, to prevent COVID-19 transmission. As cars are driven more both for commuting and for booming delivery services, they will require repairs or vehicle upgrades more often. With unemployment high and businesses struggling, however, many drivers struggle to afford necessary repairs.
To keep Americans on the road, DigniFi's platform partners with auto service centers to offer access to financial products for car repairs, tires, accessories, and other automotive needs. Franchise dealerships and independent auto shops all use DigniFi to spare customers from walking away with a poorly maintained vehicle. Customers simply apply on their personal phone and receive an instant decision from a lender.
"AutoNation's priority is keeping customers safe and on the road. Through our partnership with DigniFi, we've been able to adapt to customer needs during these times, offering them access to an alternative way to finance their maintenance and repairs," said Dave Wilmore, Senior Vice President of Customer Care & Brand Extensions at AutoNation.
To date, DigniFi's platform has provided access to over $120 million of financing that covers all five profit centers of a dealership: financing and insurance (F&I), sales, parts and accessories, service, and collision. The company has gained nationwide traction by offering value to shops, lenders, and consumers. Partner shops have increased profitability by selling more high gross margin products and services through DigniFi's platform. Lenders have supported DigniFi because they gain access to a new asset class through automotive retailers and independent repair shops. And consumers benefit because they can access financing in their moment of need.
"DigniFi is a firm that leverages innovative technology to drive performance and creates an exciting opportunity for our investors," said Zhengyuan Lu, Managing Director on Neuberger Berman's Specialty Finance team.
"During a time when many consumers are under heavy financial stress, DigniFi is helping those faced with costly car repairs gain access to fast and affordable loans," said Jim Curry, co-founder and managing partner of BuildGroup. "The company's mission and the scale at which DigniFi has integrated its offering with service centers and dealerships presented an attractive investment opportunity for BuildGroup and a great addition to our growing portfolio of modern business models."
DigniFi is a platform company that connects consumers with lenders for car repairs, tires, accessories, and other auto-related needs. The automated, contactless process serves up financial products through the point of sale at car dealerships and independent repair shops. DigniFi provides consumers with access to fixed payment plans from 12 to 36 months. The loans are originated through WebBank, an FDIC-regulated bank. To date, DigniFi has provided access to over $120 million in loans in partnership with more than 5,000 auto service centers. For more information, please visit www.dignifi.com.