Chattanooga startup ZipFlip helps connect buyers and sellers of used cars through a digital process that allows more privacy and is warrantied. Sellers would place a sticker, like this one, in their car windows. Buyers can scan it for information using a phone application.A Chattanooga startup that aims to make peer-to-peer car shopping more simple and safe has nabbed a national auto-industry entrepreneurship win.
ZipFlip won the $20,000 grand prize at the third annual Hackomotive competition in California this spring, sponsored by Edmunds.com, the third-party car shopping website.
This year's event included "the most innovative teams" the competition has hosted to date, making ZipFlip's win "all the more remarkable," Edmunds.com's CEO Avi Steinlauf said in a press release.
"It's tremendous," said Tim Kelly, ZipFlip's chairman and CEO.
Tim KellyNo stranger to the car business, he owns Kelly Auto Group and Southern Honda Powersports. The irony of his new pursuit is not lost on him.
"I do get a lot of questions," Kelly said. "There will always be a place for dealers and trade-ins." He estimates that about 13 million cars are sold in the peer-to-peer market every year, about one-third of the used car market.
The initial iteration of ZipFlip came more than a decade ago under the banner of Carclips. About a year ago, the company, called ZipFlip, started working on its product, which is expected to launch in beta version in the Chattanooga market in about 10 days.
Since last spring, the startup has forged several industry partnerships. For example, it offers a 30-day, 1,000-mile powertrain warranty through Warrantech.
"A lot of the anxiety when you are buying a car on Craigslist, for example, is: is it a good car, will the engine fall out?" Kelly said.
When sellers create their listings, they enter their VIN numbers then ZipFlip's software displays each vehicle's "Edmunds' true market value." Ultimately, a sales sticker that can be placed in a car window is generated and includes an interactive code for potential buyers to use. "It's not tacky," Kelly said. "You don't have to write your phone number on it; you don't have to give away your personal information."
The sales listing can be shared on social media, such as Facebook and Twitter, or put on Craigslist. ZipFlip's product has identity verification and electronic payment. The car buyer gets a bill of sale and odometer statement.
It doesn't cost anything to list a car for sale through ZipFlip. When a seller accepts a buyer's offer, the buyer enters payment information for $100, and $50 of that gets deducted from the seller's proceeds at the close of sale, so each side pays half of the fee.
"It's a good fit with our overall theme of equity and being an honest broker in the deal," Kelly said.
ZipFlip's target market would be people looking to buy or sell cars locally for $5,000-$15,000. The startup considers its main competitors to be Autotrader.com and Craigslist.
To be sure, ZipFlip isn't the first startup to create a peer-to-peer car shopping website. To wit: Beepi, Shift and Tred. Those trend more toward the upper end of the market, Kelly said. Also, eBay Motors pairs buyers and sellers online but isn't geared toward local sales.
ZipFlip reports that it has raised about $750,000 from angel investors in Chattanooga. It hopes to close this round at $1 million and perhaps open a second round of funding in late summer. The company is still looking for partners for inspection and financing.
The startup's team includes ZipFlip's inventor, Joe Alegre; Ironhorse Software owner, Rob Reagan, also affiliated with startup company TextRequest; Dewey Hammond; and Doug Hoyt.
Contact staff writer Mitra Malek at mmalek@timesfreepress.com or 423-757-6406. Follow her on Twitter @MitraMalek.