TrueCar Raises $30 Million From Paul Allen’s Firm

Last year, TrueCar nearly fell victim to its own success, as automotive dealers rebelled against the cocky start-up, which showed the lowest prices for cars. Only a big shift in positioning and a full-scale charm offensive saved the company.

Now it is poised to grow even bigger than before.

TrueCar plans to announce on Thursday that it has raised $30 million from Vulcan Capital, the firm that manages the fortune of the billionaire Paul G. Allen. The financing will add to the more than $200 million that the company has raised since its founding in 2005.

“Paul Allen is an icon both in the technology and investment communities,” Scott Painter, TrueCar’s founder and chief executive, said in an interview by phone. “It certainly means a lot to us.”

It followed efforts by Mr. Painter to look for new financing more than three months ago. After sitting down with about five or six potential investors, Mr. Painter eventually decided upon Vulcan as its latest backer, joining the likes of Anthem Venture Partners, Capricorn, Allen & Company and USAA.

As part of the investment, the head of Vulcan’s new growth equity initiative, Abhishek Agrawal, will join the company’s board. It is the fourth investment from the program and its Palo Alto, Calif., headquarters, joining Gilt Groupe, the software services provider Zuora and the Indian ecommerce site Flipkart.

The new financing is intended to help TrueCar as it continues to expand its offerings on car sales. The company already lists the lowest price for new and used models, often shaving thousands of dollars off the manufacturer’s suggested retail price.

By TrueCar’s reckoning, it now accounts for about 2.3 percent of all new car sales in the country.

Mr. Painter says the goal is to continue providing transparency in the sales process, suggesting that areas like leasing and trade-ins could prove ripe for innovation. Mobile apps are also an important focus.

Its ultimate goal is to amass the biggest possible treasure trove of data on car sales.

“What they’re doing is truly transformative,” Mr. Agrawal said. “They’re creating a market that really benefits both sides.”

But TrueCar’s market almost cratered last year. Mr. Painter recalled that the company began television advertising in late 2011 with an aggressive campaign emphasizing its ability to help customers get the lowest prices. That prompted a rebellion from dealers, many of whom already use sales as a loss leader for repair and maintenance services, who began boycotting the company.

“It was well publicized that we took on big losses, and people questioned whether we would survive,” he said. “We had a decision: Do we go to war, or do we go for peace?”

Mr. Painter chose peace. After months of studying its options, TrueCar changed its core message to “never overpay” and emphasized informing both buyers and dealers. The company’s new pitch was that informed customers who used its services walked into a dealership ready to buy.

Now the start-up operates in all 50 states, having signed up roughly 7,000 dealer partners.

“If we’re going to be a significant contribute to how cars are bought and sold in the future, then we have to have a sustainable model,” Mr. Painter said.

He added that while the company planned to continue growing, that plan did not currently include going public. Mr. Painter said that while the company did business with several investment banks, he flatly denied working on an initial public offering.

“It’s a great assumption,” he said. “There’s nothing to it. It’s not something we’re thinking about.”