 "Shailesh Lakhani")
When Ratan Tata invests in you, you can be pretty sure that you have arrived.
The road travelled by the Jain brothers - Amit and Anurag - and their start-up, CarDekho.com, from their garage to the umbrella of leading industrialists is full of grit and perseverance. And, a lesson in the virtues of frugal planning. The maverick entrepreneurs claim they have been in profit from the beginning in 2007 when they had two laptops, to the multi-billion valuation they are aiming for in five years.
CarDekho.com and Gaadi.com are by far the largest entities in the online automobile classifieds space, by revenue and traffic, in the country. The group's aim is to have a global footprint through innovative products and services by 2021.
Early Years
The duo from Jaipur founded the parent company, GirnarSoft, in 2007. A visit to the Auto Expo in 2008 gave them the idea of coming up with an innovate business in the online automobile space. The portal came into existence in March that year. "The initial capital was Rs 50,000. The operations started in our garage. Once we got the first big contract for GirnarSoft, we started hiring freshers. The operations expanded to a room," remembered Amit Jain.
After a good five-year run, they entered the automobile space with CarDekho.com, expanding to BikeDekho.com and PriceDekho.com.
The company has been a "no loss-no attrition" firm. All members of the core team of GirnarSoft are still with it.
Funding
"We touched Rs 300 crore in 2013. That was when the first funding of $15 million was invited from Sequoia Capital," Jain said.
The company recently concluded a Series-B funding, of about Rs 300 crore from two Hong Kong-based investors and Ratan Tata, beside Sequoia. This is the largest-ever funding of a company in the auto portals sector in India. GirnarSoft is now valued at Rs 1,800 crore. "We also wanted to start with above the line (ATL) advertising and television commercial marketing (TVC). After the funding from Sequoia, we reworked the portal, launched the mobile application, launched the first TVC - 'Suno nahi, Dekho' - followed by another ad 'Mr I Know'," Jain said.
Acquisition and expansion plans
Keeping in mind the potential of the used car market, the Jain brothers acquired another leading classifieds portal, Gaadi.com, in 2014. "We have very aggressive plans to expand the business, take the online automotive space," said Jain.
In line with this, they have taken a second funding of $50 million, which will primarily be put in use for the brand building and marketing initiatives this year. This includes ATL and below the line (BTL) activities planned for the year. A substantial amount of the money will be utilised for the development of technology. The company is also doubling the workforce from the current 1,000.
"This year, we will also consider acquisitions of smaller start-ups in similar areas of operation to add to our technology platform. We're targeting annual revenue of Rs 500 crore to Rs 600 crore, and a billion-dollar valuation over the next four to five years," Jain said.
Current traffic, business model
Cardekho.com served 34 million unique visitors in its first four years. At present, the website is drawing close to 11 million visits per month, with 7.5 million unique visitors. After the acquisition of Gaadi.com, the combined volumes of both portals comes close to 15 million visits per month. Gaadi.com alone has a portal traction of 3.3 million visits per month, with 2.4 million unique visitors. Both portals have been witnessing a growth of 45 per cent year-on-year in website traffic.
Jain said the website traffic had 165 per cent growth since the launch of CarDekho.com app, downloaded by 7,00,000 people in six months.
Cardekho.com has 40,000 active used cars and daily 20,000 new car leads. Gaadi.com offers 35,000 used cars. Jain said they now have three sources of income - subscription, transaction fee and advertisements. Together, CarDekho.com and Gaadi.com have about 2,500 car dealer tie-ups across the country. Vinay Sanghi, founder of Cartrade.com, which competes with the Jain brothers, claimed to have 4,000 dealer tie-ups, highest in the country.
CarDekho.com is also working directly with eight OEMs (original equipment manufacturers), selling about 4,000 cars per month. A Mumbai-based analyst said the used car segment has not seen much of a slowdown compared to the new cars segment. "Used cars contribute 50-55 per cent of overall car sales and are clocking a far better growth rate, of 15-20 per cent every year."
Leading dealers agree. Sukhbir Bagga, director, Group Planet Petal, which has 32 showrooms in Gujarat, said: "Online buying definitely has a better scope."
Road ahead
With the advent of digitisation, understanding and tapping the changing consumer preferences is the future. They plan to come up with something like a digital experience of a car showroom.
With the chairman emeritus of Tata Sons and auto enthusiast Ratan Tata coming on board, the company hopes to tap his experience to drive future growth. "His (Ratan Tata's) expertise in the automobile sector, especially with respect to the forays he made for his group into global markets, will likely help CarDekho scale up geographically. Besides the personal investment he made in our company, he would also give us time once every month to discuss and guide us with the expansion of the business. We plan to become a global company by 2021," Jain said.
They are also planning to launch EduDekho.com, to help students compare institutions.
| FACT BOX |
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Founders: Amit Jain and Anurag Jain Shareholders: Amit Jain, Anurag Jain, Sequoia Capital, Ratan Tata, Tybourne Capital Area of business: Online sale of used and new cars, all-round information on various models Funding: Series-A funding from Sequoia Capital ; series-B funding from Hillhouse Capital and Hong Kong-based hedge fund TybourneCapital and Sequoia Capital Plans: Focus on digitisation; innovative products like online car showrooms etc Target turnover in 5 years: Rs 500-600 crore |
| EXPERT TAKE |
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Internet and mobile portals like CarDekho will be at the forefront of the digital revolution in car buying, as consumers decide to learn more about the car they want to buy before visiting a dealer. About 70 per cent of new car buyers now first visit CarDekho before making a car purchase decision, and the number of dealer visits by those consumers is less than three versus over five for non-auto portal visitors. Consumers in the used car space are adopting online channels for a variety of factors. The main challenge and opportunity for CarDekho is to continue to build consumer trust, as buying a car is among the biggest purchase decisions a consumer makes. Giving a consumer comfort that the tools, information, and listings provide fair and objective advice to the consumer will help bring many more car buyers online.
Shailesh Lakhani, managing director, Sequoia Capital India Advisors
