How Bumper offers simple alternative to unexpected repair costs

Like all good ideas, the one for Bumper came to co-founder James Jackson to solve a specific need he had – namely how to avoid the punch of unexpected repair bills for his old Volkswagen Polo. Now the British company, which was set up in 2013 as Auto Service Finance, is flush from a $12 million (£8.8m) investment round in which both the venture capital arms of Jaguar Land Rover and Porsche sunk significant amounts, giving them a “meaningful percentage” in the company, according to co-founder Jack Allman. For Autocar Business webinars and podcasts, visit Autocar Business Insight Bumper's buy-now, pay-later product works like this. The car owner is given the option of paying in installments for repair work offered by garages and service centres that have signed up with the firm. The payments can be spread any way the owner wants (within certain boundaries) and there’s no interest to pay. Instead, Bumper makes money from the service centre, which pays it per customer. Service centres get on board because they stand to win more business after the initial investigation into the fault, says Allman. The technician might identify a number of faults, but the cost might be prohibitive in a single chunk. “Only about 40% of the work gets authorised," he said. "There’s a variety of reasons why the 60% doesn’t, but the majority revolves around price and affordability. It means the garage or dealer is missing out on revenue opportunities.” The set-up is analogous to that offered by Klarna, but Allman reckons Bumper’s advantage is their specialist knowledge. “The difference is Klarna is a jack of all trades, whereas we recognise automotive is entirely different for services and repair,” he said. For example, Bumper also includes the flexibility to increase the amount should the bill go up if the dealer finds subsequent problems not identified in the initial inspection – something Allman reckons Klarna would struggle with. The investment from Jaguar Land Rover's venture capital arm, InMotion, came about following the manufacturer's experience working with Bumper within its UK dealerships from 2020. It was “impressed by their market leading product,” InMotion said. The $12m investment round was led by San Francisco-based Autotech Ventures, an automotive-based venture capital firm that has invested in start-ups such as ride-share company Lyft and web-based used-car retailer Cazoo. Allman says its work with Volkswagen Group dealers in the UK turned the head of Porsche Ventures, bringing them on board. The investment will allow the company to double its 40-odd employees, both here in the UK and in Turkey, where it bases its tech centre for developing online technology. The money will also be used to push into Europe, starting with Germany and following into Spain, Portugal and the Netherlands. “Our aim is to be the number-one payments provider in the automotive space in Europe,” Allman said. Given how many firms in Autotech Venture’s portfolio have the words ‘acquired by’ next to them on their online entry, Bumper must also be picturing a big-money buy-out in its future as well. It has moved into profitability within the “last 12-18 months” Allman says, which is fairly quick for a fintech (financial technology) start-up. Bumper came 89th in the Financial Times’ list of Europe’s fastest-growing companies in 2021, with a revenue of 1.61m, compared with 128,010 in 2016, and was the sixth fastest-growing fintech company. Its goal now is to embed itself further in the whole buying process to enable customers to more easily choose a pay-later option. One smart way has been to embed itself into the video sent to the owner after the car's health check, so after the technician has looked over the car but before the work has been authorised. This is how it works within 160 dealers run by Arnold Clark, for example. The customer watches the video and has the option to click on the rebranded Arnold Clark Easy Pay banner. The post-inspection, pre-authorisation is one way that dealers are disincentivised from jacking up the price to include the Bumper fee, given that they don’t know yet how the customer will pay or what they will authorise. The success of Bumper means co-founder James Jackson now has little need of his own company: from driving an old Polo, he now has a new Audi E-tron on order.