ACV Auctions, Buffalo's first billion-dollar startup, files to go public

ACV Auctions, whose app lets car dealers buy and sell used cars online, is seeking to raise $100 million, according to a filing with the U.S. Securities and Exchange Commission. The news was first reported Friday by Dow Jones. 

The filing sheds unprecedented light on the inner workings of a company that has long represented some of the region’s greatest economic ambitions. Its revenues have increased over the past three years and its losses have fallen, the filing shows, though the company has never turned a profit.

While Covid-19 initially dented car sales, ACV also rebounded over the past year to log more than 390,000 vehicle sales on its platform. In 2020, ACV’s revenue topped $208 million, up 95% from the year before, while its net losses fell from $77 million in 2019 to $41 million in 2020. As of Dec. 31, more than 750,000 vehicles had sold on ACV’s platform.

The prospectus does not specify the value of shares that ACV would sell. The company is valued at more than $1.5 billion and has raised more than $350 million in funding, according to Crunchbase, a firm that tracks startup investments.

That has made ACV a rarity in Western New York, where state and local development officials have poured millions of dollars into the growth of a startup sector that has, thus far, yielded few definitive wins. ACV will become only the 20th company in the region to be publicly traded.

But ACV, founded in 2014 by entrepreneurs Dan Magnuszewski, Joseph Neiman and Jack Greco, enjoyed strong momentum from the start. From its origins at “a single desk in a Buffalo, NY, incubator,” as chief executive George Chamoun put it in a letter accompanying the filing, ACV went on to win the New York State-funded startup competition 43North in 2015. (According to the prospectus, 43North still owns a small stake.)

ACV has since expanded aggressively, with a presence in 125 markets across the U.S. In April, ACV acquired the Cincinnati-based inspection company ASI for an undisclosed amount, further expanding the company’s national footprint. Rumors of a pending public offering intensified last fall when ACV added several executives with experience overseeing liquidity events, including chief financial officer Bill Zerella, who took the smart-fitness company Fitbit public.

ACV now employs more than 1,000 people, several hundred of them in Western New York. In his letter, chief executive Chamoun indicated that the company plans to expand into more markets, including international ones, from its base in Buffalo.

“We represent the successful creation of an entrepreneurial ecosystem in our hometown and our growth and scale highlight that the spirit of innovation is alive and well in Buffalo, New York,” he wrote.

ACV’s boosters have also long claimed its IPO would bring a sudden influx of capital to the region. More than 1,800 ACV employees and consultants have options on shares, according to the prospectus, and its earliest backers included a number of local angel investors.

Speaking to the Buffalo News for a profile of ACV in 2019, the investor and start-up advocate Nasir Ali said the company’s “exit” – an investing term generally referring to an IPO or sale – would change both the perceptions and long-term economics of the region.

“As they get to exit, the biggest value is that they will have been a training ground for a new generation of entrepreneurs,” said Ali, the cofounder and chief executive of the nonprofit startup support organization Upstate Venture Connect. “And the liquidity that comes (from an IPO) will create more millionaires who will become active angel investors and founders in Buffalo.”

ACV's largest shareholders include funds operated by Bessemer Venture Partners, Tribeca Venture Partners, Softbank and Armory Square Ventures. No date has yet been set for the IPO, thought it could take place as soon as March.

The company plans to list on the Nasdaq under the "ACVA" ticker.