The used car market is getting another big injection of venture capital today, with one of India’s startups scaling faster and getting a major round of financing to double growth: Cars24 – a site and app that sells cars to users and used two-wheelers – has raised $ 450 million, a Series F of $ 340 million and $ 110 million in debt. The investment values Cars24 at $ 1.84 billion after the money, the company said, making it one of the most valuable private used car startups globally.
DST Global, Falcon Edge and SoftBank Vision Fund 2 co-led Series F, with participation from Tencent and existing investors Moore Strategic Ventures and Exor Seeds. The debt round came from a combination of financial institutions. This fundraiser, now confirmed and official, was rumored in recent weeks, albeit in a smaller amount: it did not include the debt portion, and some reports were based on regulatory filings for less than the sum ultimately collected.
Vikram Chopra, the CEO who co-founded the company at Gurugram with Mehul Agrawal, Ruchit Agarwal and Gajendra Jangid, said the plan will be to use the funds in a variety of areas.
They include national and international expansion (it is already operating in India, Australia and the UAE, and has its eyes on more markets); technology (specifically areas such as further expanding your virtual evaluation process, as well as more data science on pricing and other details related to sales and after-sales); and financing both for the purchase of vehicles and to help consumers make the purchase of a vehicle a viable economic option.
Cars24 is active in 130 cities in India and has sold 400,000 vehicles to date (both cars and motorcycles) with more than 13 million monthly visitors to its site. All of this entitles it to be the largest platform of its kind in India. But your ambition is to improve the inefficiencies of selling a car or buying a used car in many parts of the world, not just your local market.
“Buying or selling a car is difficult anywhere in the world,” Chopra said in an interview. “It’s a broken experience everywhere, so we are trying to fix this.”
This is also where the funding and technology figure is significant. When Cars24 started in 2015 in India, Chopra said, it faced the additional problem (or opportunity?) Of a complicated economic landscape with very low car ownership penetration overall – just 2%, or 2 cars per 100 people. , compared to usual. between 50 and 80 cars for every 100 people in Europe.
“But buying a used car in India is a way for a person to own some car, ”Chopra said. In a country like India, “we want to bring penetration to 10 or 15.” He added that the car resale market currently in India is around $ 25 billion, but is on track to reach $ 100 billion soon.
Cars24 has been built around a “buy, repair, then resell” model similar to that of real estate giant Opendoor: it evaluates vehicles of people looking to sell them; he buys them if an agreed price can be reached; reconditions them; and then resells them and delivers them to new owners. This model, Chopra said, gives Cars24 an edge over some of the shortcomings that exist with traditional players (both online and offline).
First, it provides a centralized platform, cars24.com and its corresponding app, where users can browse a one-stop-shop inventory that goes beyond their local areas (and local dealerships). That inventory is selected and made visible through a series of algorithms, and the price is also determined by Cars24 technology.
“CARS24 is building a data-enabled technology platform that is organizing the fragmented used car market in India,” Munish Varma, managing partner at SoftBank Investment Advisers, said in a statement. “We have been closely following their approach and efforts that have disrupted used car retail in India.”
“We believe that CARS24 is enhancing the customer experience in the used car industry with its strong focus on technology,” Sumer Juneja, partner at SoftBank Investment Advisers, said in a statement. “We will continue to support this growth given our experience in e-commerce businesses in all markets.”
Second, when consumers make a purchase, they can keep and test drive a vehicle for up to seven days “and return it if you don’t like it.”
This, Chopra continued, is in contrast to other used car dealerships as well as physical dealers: either they don’t offer trial runs or (in the case of physical dealerships or individual offline sellers), they might give a 10 driver. or 15 minutes maximum, with someone to attend to you while you are driving the vehicle: this is not a good way to find out what you like or dislike about a vehicle.
It is also a model that investors believe will give Cars24 an edge over its competitors.
“We have studied used car platforms globally and are struck by the similarities we see between CARS24 and similar companies that have successfully scaled up,” said Navroz D. Udwadia, co-founder of Falcon Edge Capital, in a statement. “CARS24 has consolidated its first-mover advantage by building powerful supply side moats, which in turn drive demand liquidity on the platform. By positioning itself as a buy and sell solution for consumers. , CARS24 generates immense memory. It is rare to find a company so focused on the consumer experience and so driven to ensure that it is outstanding through the use of data science and technology. Finally, we are deeply impressed by the leadership of the founders , and we are delighted to support them as they transform the used car industry in India and scale internationally in MENA and Southeast Asia. “
A used car market that raises a lot of money is somewhat ironic given some of the biggest trends in the world of transportation.
Some have theorized that there is a wave of factors, including the rise of ubiquitous e-hailing apps like Uber; on-demand car-sharing services like Getaround or Zipcar; a push in urban centers that encourages people to use a wider range of transportation options to compensate for traffic; and major environmental trends that are leading some to avoid gas-guzzling cars, would propel the world far of car ownership. However, essentially, Cars24 (and others like it) are extending the life of many older models to keep more vehicles on the road and private hands.
But using Uber can be expensive and is not the same as having your own wheels, and the desire to have your own vehicle may be at a high point right now due to Covid-19 and people concerned about spreading or contracting the virus. Chopra said. .
“It is definitely not the case in India that fewer people want to own cars,” he said. “During the pandemic, we have seen a lot of demand, specifically in India.” As for new and greener vehicle technology, this is also interesting and will simply feature another class of vehicles at Cars24 as EV adoption increases, he added. But not everything is ready yet.
The strength of the current opportunity is, in part, why we seem to have found ourselves swarming with startups and expansions in hopes of defining the next generation of used car dealership platforms.
Others in the same space who have raised money recently include close competitors like Spinny, also from India; Cazoo in the UK, which has now gone public; InstaCarro from Brazil; Kavak outside of Mexico; other Carsome from Malaysia, among many others. Carvana, one of the largest used car platforms, is also publicly traded and is now valued at nearly $ 28 billion.
What’s been interesting is that each of these big players has so far carved out very strong markets for themselves in their home countries, and only more recently are they moving to expand internationally. Cars24 has attracted hundreds of millions of dollars in funding ( so it raised $ 200 million less than a year ago) in part because its investors believe it has what it takes to export and therefore scale its model beyond the huge market of India.
“CARS24 is at the forefront of transforming the way consumers buy and sell cars by providing a unique end-to-end digital transaction and buying experience,” said Rahul Mehta, managing partner of DST Global, in a statement. “They have emerged as the undisputed leader in the used car space in India and early traction in international markets is exceeding expectations. We love supporting founders who are bold and ambitious thinkers and couldn’t be more excited to enter the second entry of our long-standing partnership with CARS24. “