India’s Cars24, a used-vehicle marketplace, raises $450M at a $1.84B

Another big influx of venture capital is happening in the used car market today, with one of the rapidly scaling startups out of India raising a major round of financing to double the growth: Cars24 – a site and app that helps users buy their cars. and uses two-wheeled motorbikes – has raised $450 million, a Series F of $340 million, and $110 million in debt. The investment value Cars24 at $1.84 billion post-money, the company said, making it one of the more valuable privately used car startups globally.

DST Global, Falcon Edge and SoftBank Vision Fund 2 co-led the Series F, in which Tencent and existing investors Moore Strategic Ventures and Xor Seeds are also participating. The loan round came from a mix of financial institutions. This fundraising, now confirmed and official, was rumored in the past weeks, albeit on a smaller amount: it did not include the debt portion, and some reports were based on regulatory filings for less than the amount eventually raised.

CEO Vikram Chopra, who co-founded the company in Gurugram along with Mehul Agarwal, Ruchit Agarwal and Gajendra Jangid, said the plan would be to use the funds in multiple sectors.

They include national and international expansion (it already has operations in India, Australia and the United Arab Emirates, with an eye on more markets); technology (especially in areas such as further expanding its virtual valuation process, as well as more data science around pricing and other details related to sales and after-sales); and financing to buy in vehicles, as well as helping consumers make vehicle purchases a viable economic option.

Cars24 is active in 130 cities in India, and has sold 400,000 vehicles (both cars and motorbikes) to date, with 13 million monthly visitors to the site. All this gives it the claim of being the largest platform of its kind in India. But its ambition is to improve the inefficiencies of selling a car, or buying a used car, in many parts of the world, not just in its home market.

“It is difficult to buy or sell a car anywhere in the world,” Chopra said in an interview. “It’s just a broken experience everywhere, so that’s what we’re trying to solve.”

This is also where financing and technology come into play. When Cars24 first launched in India in 2015, Chopra said, it had the additional issue (or opportunity?) of a difficult economic scenario with between 50 and 80 cars per 100 people in Europe.

“But buying a used car in India is a way for a person to own Any car,” said Chopra. In a country like India, “we want to take admissions to 10 or 15.” He said that the car resale market in India today is around $25 billion, but is on its way to reach $100 billion soon.

Cars24 is built around a “buy-in, fixing, and then resell” model similar to real-estate juggernaut Opendor: it evaluates vehicles from individuals looking to sell them; buys them if an agreed price can be reached; repairs them; and then resells them and distributes them to the new owners. Chopra said, this model gives Cars24 an edge over some of the shortcomings present with traditional players (both on and offline).

First, it offers a centralized platform, and its related apps, where users can browse a one-stop-shop inventory that extends beyond their local areas (and local dealers). That inventory is curated and searchable using multiple algorithms, and pricing is also determined by Cars24’s technology.

“CARS24 is building a data-enabled tech platform that is tackling the fragmented used car market in India,” Munish Verma, Managing Partner, SoftBank Investment Advisors, said in a statement. “We are closely monitoring its approach and efforts, which has disrupted retail sales of used cars in India.”

“We believe CARS24 is enhancing the customer experience in the used car industry,” said Sumer Juneja, partner at SoftBank Investment Advisors, in a statement. “We will continue to support this growth given our expertise in e-commerce businesses across markets”.

Second, when consumers make a purchase, they can keep and try a vehicle for seven days “and return it if you don’t like it.”

This, Chopra continued, is in contrast to other used-car sales sites as well as physical dealers: either they don’t offer test runs, or (in the case of physical dealers or individual offline sellers), they don’t offer a driver. Can give 10 or 15 minutes Above all, have someone in your presence while you drive: not a great way to find out what you like or don’t like about a vehicle.

This is also a model that investors believe will give Cars24 an edge over its competitors.

“We have studied used car platforms globally and we see similarities between CARS24 and similar businesses that have grown successfully,” Navroz D Udvadia, co-founder of Falcon Edge Capital, said in a statement. “CARS24 has consolidated its first-mover advantage by creating wider supply side moats, which in turn demand liquidity on the platform. In establishing itself as a buying and selling solution for consumers, CARS24 is highly mindful. It is rare to find a business as focused on the consumer experience and motivated to ensure this through the use of data science and technology. Finally, we are deeply impressed by the founders’ leadership, and thrilled to support them as they transform the used car industry in India and scale internationally in MENA and SE Asia. “

Given some of the big trends in the world of transportation, raising huge amounts of money in a used vehicle market is somewhat ironic.

Some have theorized that a wave of factors – among them the rise of ubiquitous e-hailing apps like Uber; on-demand car-sharing services such as Getaround or Zipcar; a push in urban centers to encourage people to use a wider range of transportation options to offset traffic; And the big environmental trends that are prompting some people to avoid gas-consuming autos – will move the world Distant from car ownership. Yet inevitably, Cars24 (and others like it) are extending the life of a lot of older models to keep more vehicles in circulation and in private hands.

But using Uber can be expensive and not as expensive as your own wheel, and due to COVID-19 and people worried about spreading or catching the virus, the desire to have your own vehicle is probably at a high point right now. , Chopra said.

“It is certainly not the case in India that fewer people want to buy a car,” he said. “During the pandemic, we have seen a lot of demand especially in India.” On new, green vehicle technology, it is also interesting and will introduce another class of vehicles on Cars24 as adoption of electric vehicles increase, he said. But all is not well yet.

The strength of the current opportunity is partly as it seems we have found ourselves overcrowded with startups and scale-ups hoping to define a new generation of used car-sales platforms.

Others in the same space that have recently raised funds include close competitors like Spinny, who are also based out of India; Cashew in the UK, which has now gone public; Instacaro out of Brazil; Kavac from Mexico; and Karsom from Malaysia among many others. Carvana, one of the largest used-car platforms, is also publicly listed and is now valued at approximately $28 billion.

What has been interesting is that each of these big players has so far carved out very strong markets for themselves in their home countries, and they have only recently been moving to expand internationally. Cars24 has attracted hundreds of millions of dollars in funding (it raised $200 million less than a year ago) because its investors think it has what it takes to export, and thus its model beyond India’s vast market. Is.

“Cars24 is at the forefront of transforming the way consumers buy and sell cars,” said Rahul Mehta, Managing Partner, DST Global, in a statement. The traction exceeds expectations. We love supporting founders who are courageous and ambitious thinkers and couldn’t be more excited to enter the second innings of our long-standing partnership with CARS24.”

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