You will receive a link from a seller to pay for the car you are about to buy. Should you trust it?
Seattle-based startup KeySavvy wants to help by tackling fraud and simplifying private car transactions.
Co-founder and CEO Andrew Crowell began his career as a software engineer working at several automotive companies, building on his passion for cars. In 2015, Crowell was CTO at TRED, a peer-to-peer online vehicle marketplace and transaction platform in Seattle, where he met his co-founder Jason Hoetger, formerly head of engineering at TRED. Before TRED, Hoetger was a software engineer at REI and OfferUp.
While at TRED, Crowell and Hoetger learned about the prevalence of fraud in the private car sales market, where buyers and sellers communicate directly with each other. They founded KeySavvy in June to provide buyers and sellers with a more secure way to transact vehicle transactions so that both parties can focus on getting the best price, Crowell said.
KeySavvy is a peer-to-peer vehicle payment platform that aims to eliminate the risk of title fraud for buyers and payment fraud for sellers. It is aimed at consumers who hope to maximize their value through the private market but are hesitant due to the risk of fraud.
After the buyer and seller have independently agreed on the vehicle price, the seller will send a KeySavvy payment link to the buyer. After the buyer accepts the price, both parties electronically sign the necessary documents and “handshake” to accept the deal. This will start the KeySavvy verification process.
As an authorized car dealer, KeySavvy pulls the data directly from state DMVs along with other outside sources to verify the identity of the seller and buyer and establish the vehicle’s ownership history. If no red flags are raised, the buyer can pick up the car and the seller will receive payment through KeySavvy.
Buyers pay a flat transaction fee of $49, and sellers pay no fees unless they have a lien. According to Crowell, KeySavvy guarantees buyers with clear title and registration and sellers with verified payment in less than 30 minutes.
According to Crowell, KeySavvy’s biggest challenge is overcoming the consumer confidence barrier with a business model based on an online payment link.
“I think we can lower that confidence threshold by being the educator,” Crowell said. “Not everyone knows that they can buy a car that they eventually can’t register, and they drive this car illegally and just get stuck with it.”
The KeySavvy blog features tips for buyers and sellers about vehicle transactions, as well as a compilation of Reddit posts from people getting scammed during the car buying process.
KeySavvy is bootstrapped and currently has two full-time employees.
We caught up with Crowell for this Startup Spotlight. Read on for his answers to our questionnaire. Answers edited for brevity and clarity.
Our strategy to grow our customer base: Our primary source of customer acquisition is partners. They are very eager to work with us because they recognize that by referring their customers to KeySavvy, their customers will have a better experience. We eliminate so much of the potential risk and just make it easier for them to get a better value.
The smartest move we’ve made so far: Positioning KeySavvy to partner with other great companies our customers already use. Not being a marketplace allows us to focus on that primary pain point, which is the transaction. There are already a ton of great websites – Tred, CarGurus, Craigslist, Facebook – all of which are great sites to list your car for sale and find a buyer. But whichever market you choose, KeySavvy is the safest and easiest way to complete your sale.
How the turbulent economy has affected our business: When you start with zero market share, it doesn’t really matter. At the macro level, this is a very good thing to get into. Typically, the auto industry is quite resilient to economic downturns as many people simply need a car.
The car market has been really weird lately. It has driven up prices. I don’t think that really touches us too much, other than people looking for better deals and trying to get the most value out of their cars. And that drives people to the private market, which is great.
The biggest mistake we’ve made so far: Not only do we need to acquire buyers, but we also need to acquire a seller, and one of those parties heard about us through the other party, which they probably don’t trust. So, how do we win that consumer confidence? We underestimated that – we haven’t been in business long enough to make too many mistakes, but that’s one where we underestimate how high it would be.