Finn, a Munich-based startup, is redefining the automotive industry with its innovative car subscription platform. Unlike traditional car buying or leasing, Finn offers a fresh approach for those keen on driving new vehicles. The company recently raised a remarkable €100 million (around $109-110 million) in a Series C round, skyrocketing its valuation to a staggering €600 million ($658 million). This funding is earmarked for technological advancements and market expansion, emphasizing a shift towards electric vehicles and cloud-based tools for service management.
Currently managing 25,000 subscriptions across Germany and the U.S., Finn’s growth is not just impressive but also indicative of a significant market shift. Leading this round is Planet First Partners, a European growth equity firm with a strong focus on sustainability. This aligns perfectly with Finn’s ambitious goal to ensure 80% of its car inventory is electric by 2028, a substantial increase from the current 40%.
Nathan Medlock, managing partner at Planet First Partners, highlights the critical role of electric vehicles in the global shift towards a more sustainable economy. He points out that road transport accounts for a significant portion of global emissions, making electric vehicles pivotal in the quest to decarbonize society. With this funding round, Medlock joins Finn’s board, bringing his expertise and vision to the table.
Finn’s journey in the car subscription market is particularly noteworthy. Established in Germany in 2019 and expanding into the U.S. in 2022, Finn’s strategy is shaped by learning from the failures of predecessors in this sector. Boston Consulting has previously described car subscriptions as a “product in search of demand,” highlighting the challenges of unit economics and market fit. However, Finn’s CEO and co-founder, Maximilian Wühr, believes the company’s later entry into the market has provided valuable insights to avoid past mistakes.
Finn’s business model revolves around offering new cars, which constitute about 97% of its inventory. These vehicles are sourced directly from OEMs in bulk and are available in around 350 different configurations. The company has pre-negotiated deals with car retailers to purchase the vehicles once their subscription periods end. Unlike some of its peers, Finn doesn’t allow car customization beyond the offered configurations and prohibits the use of vehicles for ride-hailing.
The subscription packages are all-inclusive, covering insurance, tax, and technical inspection. Prices vary, with popular models ranging from €430 to €1,200 per month. This approach has led to an impressive annualized recurring revenue of €160 million across its markets, with the majority, €150 million, coming from Germany. While Finn is not yet profitable overall, Wühr asserts that the core product is profitable, indicating a sustainable business model.
Data science plays a significant role in Finn’s operations, helping to determine customer preferences and pricing strategies. The company has also developed an efficient e-commerce platform to streamline the car buying process, reducing shopping cart abandonment and optimizing user experience. Wühr emphasizes the goal of creating a seamless app experience for subscribers, focusing on vehicle exchanges, customer support, and additional services while minimizing the need for human intervention.
Finn’s expansion into the U.S. presents unique challenges and opportunities. While the U.S. market has been receptive from a consumer standpoint, establishing relationships with OEMs for vehicle sourcing has been slower compared to the success in Germany. Wühr acknowledges these difficulties but remains optimistic about scaling up in the U.S. as the company continues to grow.
In conclusion, Finn’s recent funding and strategic focus on electric vehicles and technological advancement position it as a major player in the evolving car subscription landscape. As the company navigates the challenges and opportunities of expanding in diverse markets, its journey offers valuable insights into the future of automotive mobility and the potential of innovative business models in the industry.
