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    Cars24 raises new funds led by DST Global, valuation hits $1 billion

    Synopsis

    The proceeds from the funding round will be used by Cars24 to invest in new business verticals and strengthen its product and technology capabilities.

    Cars24 becomes India’s latest unicorn, raises $200 million funding
    Online used car marketplace Cars24 has secured $200 million in Series E financing led by existing investor DST Global at a post-money valuation of just over $1 billion, catapulting the company into the unicorn club, becoming the first startup in the auto sector to achieve this milestone.

    Its valuation has jumped from $500 million in October last year, when it had raised $100 million.

    Existing investors including Exor Seeds, Moore Strategic Ventures, and Unbound also participated in the round.

    For DST Global, an early backer of the largest internet firms including Alibaba, Facebook, and Twitter, this investment comes after it pumped $122 million into educational technology firm Byju's in August. Among its other India investments include ride-hailing major Ola, food delivery firm Swiggy, and business-to-business commerce startup Udaan.

    “Cars24 has pioneered a significantly differentiated experience for the customer and dealer by deeply leveraging data and technology at each step, resulting in world-class operational efficiency and market leadership in the segment," said Rahul Mehta, managing partner at DST Global.

    Founded in 2015 by Vikram Chopra and Mehul Agrawal, Cars24 allows car owners to sell their vehicles, and get paid almost instantly after the customary vehicle inspection. It then sells the cars through its proprietary auction platform to businesses dealing in pre-owned vehicles.

    The funding round is largely primary, although it recently undertook an employee stock buyback programme worth Rs 35 crore, chief executive Chopra told ET.

    Indian startups turned unicorns in 2020ETtech
    Graphic: Rahul Awasthi

    The proceeds from the round will be used to invest in new business verticals and strengthen its product and technology capabilities.

    “The used car market has been growing at a pretty rapid pace in the last decade. And I think Covid-19 has given it a little bit more acceleration. A key priority for us going forward is increasing the market share in car sales from 4% to double digits, which would require a lot of investments in technology and data science capabilities," Chopra told ET. "We are also going to double down on bikes, which is a category that we started several months ago and are seeing solid traction."

    Chopra said the company's transaction volume has surpassed its pre-Covid-19 volumes by more than 20% and registered a nearly four-fold increase in traffic during this period.

    At present, the company said it was clocking sales worth over $50 million monthly, with over 15,000 cars transacted every month. It also said it had transacted over 3,000 two-wheelers till now.

    Cars24 is also developing its consumer financing division, for which the company had received a non-banking financial company licence from the Reserve Bank of India last year.

    "We have witnessed a strong demand for it, but we have been limited by our own capabilities. So, we are going to try and service that demand and increase our financing portfolio. That is an important area for us as we move along," he said.

    The NBFC arm had secured debt financing of Rs 10 crore from Vivriti Capital in July.

    Another key initiative in the works is a post-transaction servicing facility, in a bid to be present across all stages of the vehicle sale lifecycle.

    "Right now, we are only reconditioning vehicles for the cars that the consumers have bought from us, but eventually we intend to provide it as a standard servicing facility to all car owners over the next few quarters," Chopra said.

    India’s used car market was valued at $24.2 billion in 2019 and it is expected to register a compounded annual growth rate of 15.1% during 2020-2025, according to market research firm Mordor Intelligence.

    Tech billionaire Yuri Milner-led DST Global's international bets in this sector include Europe's leading used-car marketplace Auto1 Group and Mexico's first tech unicorn Kavak.

    1 Comment on this Story

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