Spinny enters unicorn club with $283 mn fundraise at $1.8 bn valuation

The latest round includes a primary capital infusion of $250 million and a secondary sale of $33 million by angels and a few seed stage investors

Used car retailing platform Spinny has raised $283 million in its Series E funding round from new and existing investors. The round was led by Abu Dhabi-based ADQ, Tiger Global and Avenir Growth.

The round includes a primary capital infusion of $250 million and a secondary sale of $33 million by angels and a few seed-stage investors. The additional funding takes the overall funds raised by Spinny so far to more than $530 million and with this round Spinny’s valuation stands at around $1.8 million.

The company said the gross merchandise value (GMV) on its platform in CY 2021 has grown 5X compared to last year to $300 million and it expects to hit $1 billion in GMV next year. The company sold around 3,500 used cars on its platform in November and expects to close the calendar year at sales of 85,000-90,000 units.

Founded in 2016, Spinny currently has 23 car hubs that operate across 15 cities - Delhi, Gurugram, Noida, Bengaluru, Mumbai, among others. The used car marketplace aims to expand to 25 cities by the middle of next year.

“The good thing about our growth is that it has happened without any major advertising and marketing spends. Almost 40 per cent of buyers come to our platform due to word of mouth rather than any kind of reference bonus. We have always had the lowest customer acquisition cost among our peers and plan to stay that way,” Spinny co-founder and CEO Niraj Singh told Business Standard.

Spinny is seeing positive contribution margins from five of the 15 cities it currently operates in and aims to be break-even at a company level in the next 1.5 years -2 years timeframe. 

“We can become profitable in the next few months if we want to, but that will come at the cost of growth. So, the trade off that we have decided to make is to grow fast and keep an eye on profitability too,” said Singh. 

The company will look to invest the large round of funding to strengthen its technology so that second hand car buyers find its platform more transparent and also look for acquisitions to that effect.

“We don’t want to spend money on buying another company to add revenues or GMV. What we are looking for is a couple of start-ups who have really good technology that can be integrated with our platform,” said Singh.

Over the last 12 months, Spinny has added new features such as Spinny360 — interactive inventory viewing — an assured buyback programme that allows tenure-based flexible car ownership, online booking, and doorstep test drives and delivery. 

The newly raised capital will be deployed towards further stepping up the customer experience, strengthening technology and product capabilities and building teams across functions. 

Singh said: “We set afoot to build Spinny with a customer first approach - solving for lack of trust in car buying and selling experience, with a highly personalised and detail-oriented approach. Leveraging technology, our focus is to further strengthen our quality and experience control capabilities.”

The pre-owned car market is set to more than double to 8.2 million units or $47 billion over the next five years ending FY26 from 4 million in FY21 or $17 billion, which means that two used-cars will be sold for every new car sold, according to a report by JM Financial.

The used-car market was 4.4 million units worth $19 billion in the pre-pandemic FY20, according to the report that also forecast a clear highway for the used-card market driven by the pandemic-induced demand for personal mobility and affordability because after the BS-VI implementation cost of new cars has been on an upswing.