ACV Auctions has announced two things that qualify as major news in Buffalo’s startup community. First, it has hired George Chamoun to be its CEO, bringing one of Buffalo’s most noteworthy tech entrepreneurs back to his roots of growing a business-to-business software startup.
Second, the company has raised a $5 million Series A round of venture capital led by a Manhattan-based investment firm, Tribeca Venture Partners, and also including Manhattan-basd SoftBank Capital, Syracuse-based Armory Square Ventures and Buffalo’s Rand Capital Corp.
The deal makes ACV a leading symbol of Buffalo’s young software movement and calls to mind previous success stories such as Synacor Inc. – which was co-founded by Chamoun, Campus Labs and Liazon Corp. It is the first round of institutional venture capital raised from a company belonging to the Z80 Labs technology incubator and the most significant financial milestone among the 22 companies who received 43North awards over the past two years (ACV won the $1 million grand prize in 2015).
It’s also good news for the various locally-based angel investors who backed the company’s $1 million seed round, which was led by an investment from Z80’s state-backed investment fund.
Finally, ACV’s progress validates the initial inspiration by Joseph Neiman, who’d run used car lots and found the process of wholesale car auctions to be cumbersome, inefficient and geographically limited. Neiman contacted his friend, Daniel Magnuszewski, one of Buffalo’s leading technologists who was then managing Z80, and they launched the startup with a third co-founder, Jack Greco, in 2014.
The ACV platform is designed to build online marketplaces through which cars can be sold by franchise dealers, which are constantly taking used cars on trade-ins, to used car dealers which typically get their inventory via physical wholesale auctions. Instead of the traveling and waiting associated with those auctions, wholesale buyers and sellers can do a transaction with a few clicks on their cell phone at lunch.
The trick for ACV – which now has 28 employees in Buffalo and 36 overall – is that it essentially had to replicate entire marketplaces in a digital format. That meant onboarding the buyers and sellers to a point where there was a critical mass that made the product work. The good news, according to Chamoun, is that it’s worked in Buffalo and Albany and is showing significant progress in more recent markets: Rochester, Syracuse and Binghamton.
The venture funding will support the company’s region-by-region expansion model, next to Cleveland and Pittsburgh, along its continued technical development. More than 800 entities are currently on the platform and a constant stream of auctions are taking place.
“It’s proven,” Chamoun said. “It works. Now it’s just a matter of getting to scale.”
ACV represents a compelling opportunity for Chamoun, who helped Synacor raise tens of millions in venture capital, grow to hundreds of employees at its downtown Buffalo headquarters, go public in 2012 and subsequently to begin the recovery from a number of factors that led to post-IPO struggles. Taking two Buffalo-based tech startups to the finish line would be a unique resume.
But he said he’ll follow the same philosophies that allowed Synacor to flourish once its initial model was proven: to find talented people who can execute their given roles. The only thing that’s different is now he isn’t selling to telecommunications companies.
“My confidence is very high,” he said. “You hire the right people. Put them in the right roles. And magic happens.”
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