CarWoo unveils a better way to buy a car

As the influence of the Internet creeps into more and more of our lives, the car-buying process is one of the few areas that remains untouched — at least, that’s what Tommy McClung, cofounder and chief executive of CarWoo, argues. Sure, people can do more research on the Web before they buy, but the basic process remains the same, and often painful. McClung aims to change that.

The idea behind the site is to give the buyer more control over the car-purchasing process. Instead of showing up at a few car dealerships and hoping that you can negotiate your way into a good deal, CarWoo users post what they’re looking for on the site. If you know exactly what you want, you can be very specific in your listing, including the exact model and features. If you’re less certain, or if you care more about price, the listing can be more open-ended.

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Then it’s the car dealers’ turn to try to win your purchase. Local dealers can offer a price on the car, then you can continue to negotiate with them if you think they can go lower. In some versions of CarWoo, the dealers can even see each others’ bids, so they can drive down the price among each other. None of your contact information is available to the dealer, so they can’t call or email and harass you. (The approach sounds similar to what Redbeacon has done for service listings.) Finally, once you’ve found a car and a price that you like, you can make an agreement with the dealer, print out the details, and bring them to the dealership, where you pick up your car.

Even though CarWoo is officially launching today, the team has actually been working on the site for a while. It was incubated by Y Combinator last year — a fact that surprised me, since waiting a year to launch is pretty much antithetical to the philosophy of Y Combinator partner Paul Graham, who encourages startups to launch as quickly as possible. But McClung said CarWoo is an unusual case, because the team really needed to develop a market where buyers and dealers could find what they’re looking for. And thanks to this careful approach, the site has dealers from across the United States, he said.

CarWoo charges users a one-time fee of either $19 or $49, depending on how many dealers they want to compete and whether those dealers can see each others’ bids. Early users seemed to gravitate towards the more expensive plan, which is still a good value, McClung said, since they save an average $500 on their purchase.

The Burlingame, Calif. company has raised a total of $8 million, most recently in its first institutional round led by Interwest Partners. Other investors include Comcast Interactive Capital, Blumberg Capital, Accelerator Ventures, Raymond Tonsing, Dillon McDonald, Gmail creator Paul Buchheit, Delicious founder Joshua Schachter, Aydin Senkut’s Felicis Ventures (Senkut is an investor in VentureBeat), and the Founders Fund’s angel program.