Indian used car marketplace Cars24, backed by Japanese behemoth Softbank, has raised $400 million as a part of its latest funding round.
The funding comes just months after the company raised $450 million in September.
In the current round, about $300 million of the total corpus has come in through equity, while the remaining $100 million is debt poured in by diversified financial institutions.
This marks a part of the Series G round for the company established in 2015 as a single stop for buying or selling used cars, all over India.
In the current round, the equity part has been led by the startup’s existing investor Alpha Wave Global, earlier known as Falcon Edge Capital. The round also saw the participation of its existing investors whose names have not been disclosed.
With this round, Cars24’s valuation stands at a whopping $3.3 billion. In September it was pegged at $1.84 billion when the company raised its Series F equity round led by DST Global, Falcon Edge and SoftBank Vision Fund 2, along with the participation from China’s Tencent, among others.
Cars24 plans to use a part of the funding to ramp up its international presence while using the other part for mega refurbishment plans as it carves out its expansion strategy for the domestic market – especially tier 2 cities in India.
The company entered countries such as Australia, the UAE and Thailand over the past six months and is currently planning to expand its presence in other markets as well.
The used car industry in India is expected to reach a size of over 70 lakh vehicles by 2025-26, while the number stood at 38 lakh in 2020-21, per a study.
According to industry experts, growth in the sector has been fueled by the pandemic even more as people are now preferring to travel in their own vehicles instead of availing public transport. Besides, other factors such as changing demographics and aspirations, first-time buyers, and availability of financing options are acting as growth drivers for the industry which is still at a nascent stage.
Typically, car selling or buying in India has been a tiresome process, with only 2 out of 100 people owning cars in the country, which goes on to signal the big headroom for the industry to grow.
Cars24 competes with the likes of Droom, CarDekho and CarTrade in India and it drove into the unicorn club late last year after raising $200 million in its Series E round at a valuation of over $1 billion.
According to a report by Mint, Cars24 clocks an annual revenue run rate (ARR) of $1 billion, driven by four-wheeler and two-wheeler vehicle sales, and its non-banking finance (NBFC) arm. It plans to double its ARR by December 2022, the report had stated.
Among others in the industry who recently raised funding, Tiger Global-backed Spinny raised $283 million as a part of its Series E round at a valuation of $1.8 billion. In July, vehicle retailing platform Droom made headlines when it secured $200 million at a valuation of $1.2 billion.