Online used car marketplace Cars24 has secured $200 million Series E financing led by existing investor DST Global at a post-money valuation of just over $1 billion, doubling from $500 million when it had raised $100 million financing in October last year.
The financing round also catapults the company into the unicorn club, becoming the first startup in the auto sector to achieve this milestone. 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 months after pumping in $122 million to educational technology firm Byju’s in August this year. 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, paying them almost instantly, post the necessary vehicular inspection. It then sells the cars through its proprietary auction platform to businesses dealing in pre-owned vehicles.
The round is largely primary, although it recently undertook an employee stock buyback programme worth Rs 35 crore, chief executive Chopra told ET. 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 has given it a little bit more acceleration. A key priority for us going forward is increasing the market share in car sales from a 4% share to a double-digit share 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 claimed the company’s transaction volume has surpassed its pre-Covid volumes by more than 20% and registered a nearly four-fold increase in traffic during this period. At present, the company claims to be clocking sales worth over $50 million on a monthly basis with over 15,000 cars transacted every month. It also claims to have a transacted over 3,000 two-wheelers until now.
Cars24 is also developing its consumer financing division, for which the company had received a non-banking financial company license 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 a debt financing of Rs 10 crore from Vivriti Capital in July this year.
Another key initiative in the works is a post-transaction servicing facility, in a bid to have a presence 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 compound 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.