Newest unicorn in town: Cars24 raises $200 mn in Series-E funding

The company was valued at over $1 bn in the funding round led by DST Global

Cars24, a leading online transaction platform for pre-owned vehicles, has become the latest unicorn or start-up valued at more than $1 billion. The Gurugram-based firm has raised $200 million in a  Series E funding round led by Russia-born billionaire Yuri Milner's DST Global at a post-money valuation of over $1 billion. 

 The valuation of the online marketplace for used cars has doubled from $500 million (when it had raised $100 million financing in October last year). Existing investors, including Exor Seeds, Moore Strategic Ventures, and Unbound, have also participated in the fresh deal.

This funding will be used to invest aggressively in technology, product innovation, and scale up new business verticals. 

With annual transactions exceeding 200,000 units and a 4x increase in website engagement, the company has already surpassed pre-Covid levels.

“Traditionally, car selling or buying has been a tiresome process. However, over the past five years, we have strived to transform the customer's journey - 'the Cars24 way' is hassle-free, safe, and transparent,” said Vikram Chopra, co-founder and chief executive officer of Cars24.  

“With this investment, we will continue to innovate our product and bolster our capabilities to provide the best experience for all parties - with sellers getting the best value for their car, and buyers getting to choose from a wide assortment of automobiles," added Chopra.

Cars24 competes with significantly funded players such as CarDekho, Droom, CarTrade, and OLX. The firm said it has strong foundation in technology, which has made the customer experience efficient and reliable. 

 The company has tech capabilities that include unique vehicle appraisal technology, artificial intelligence-enabled pricing algorithms that give the accurate market price of a vehicle, and a scaled-up infrastructure that ensures seamless execution.

“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, adding, “We are very excited to partner the (Cars24) team and look forward to working together, as it continues to deliver tremendous value to the entire ecosystem through First Principles thinking.”

Cars24 recently forayed into the used two-wheeler category, and in less than six months of operations, the company had transacted over 3,000 two-wheelers. It also acquired a non-banking financial company licence last year for its financing business, and is now providing quick and easy loan plans with two-hour disbursements.

Founded in 2015 by Vikram Chopra, Mehul Agrawal, Ruchit Agarwal, and Gajendra Jangid, Cars24  offers a hassle-free transacting experience to customers to buy and sell pre-owned vehicles (cars and motorcycles) as well as financing options.

From its very first location in 2015, next to a petrol pump in Gurugram where it saw sellers come all the way from Noida, today Cars24 is spread across cities and states in India. It now operates in over 130 cities in India.

It follows a customer-to-business model. It buys cars from individuals and sells them to dealers. Unlike a classified platform, the company enables end-to-end transactions and charges a commission for each transaction.

The firm has built a strong technology backbone that features various offerings, including an innovative auction format, a  proprietary inspection app, and a powerful algorithm that matches supply and demand across the country. In addition, the firm also features an innovative price discovery mechanism for used vehicles.

Apart from the latest funding deal, the firm had raised a total capital of $193.8 million from investors. Last year in October, it raised $100 million in a Series D round of funding. Along with its existing investors – KCK Global, Fiat's Agnelli family, and Sequoia Capital India - the company also raised a part of the round from Unbound, a global investment and venture capital firm headquartered in London, and Moore Strategic Ventures, a New York-based investment firm. It had also signed up former Indian cricket captain Mahendra Singh Dhoni as brand ambassador and investor in the company.

 In September, edtech start-up Unacademy became a unicorn in the country. The firm, which was launched as a hobby on YouTube, raised $150 million in a round led by Japanese conglomerate SoftBank valuing it at $1.45 billion - a threefold jump in just six months. 

Also, in less than two months after it raised $500 million in a financing round, edtech decacorn Byju's is learnt to have closed $200 million in a fresh round of funding. This has lifted the Bengaluru-based firm’s valuation to $12 billion - close to $1 billion higher when compared with the previous round.

IN TOP GEAR

• Cars24, an online transaction platform for pre-owned vehicles, has become the latest ‘unicorn’
• It has raised $200 million in a round led by DST Global.
• Existing investors, including Exor Seeds, Moore Strategic Ventures and Unbound, also participated in the funding round
• The firm’s valuation has doubled from $500 million in October last year, when it had raised $100 million
• With over 200,000 annual transactions and 4X increase in website engagement, the company has surpassed its pre-Covid business level.