Sydney-based online used car dealership Carma has today revealed a mammoth seed round, having received US$20 million (AUD$28 million) in funding from US investment firm Tiger Global.
The company, which has been operating in stealth mode for the past nine months, is expected to launch its online platform soon and is already in discussions with investors to raise funds for accelerated expansion in 2022.
Co-founded by CEO Lachlan MacGregor and chief commercial officer Yosuke Hall, Carma operates a business model whereby customers can search, buy, and finance pre-owned vehicles online which are then delivered to their home.
Unlike online classifieds and marketplaces, Carma will own the cars and offer a complete end-to-end digital purchase process, and will offer instant finance options on the platform.
According to the startup, the investment from Tiger Global which was made in March 2021 funded the recruitment of an executive team, allowed Carma to develop its website, and established its first inspection and reconditioning facility in Sydney’s Alexandria.
“Carma aspires to become the trusted leader in Australian used cars. A car is the second-most valuable asset most Australians own, but the current buying experience can be time consuming and frustrating. Carma is laser-focused on bringing ease, trust and joy back into used car buying,” co-founder Hall said.
“In line with our commitment to our customers, we will be controlling our entire supply chain in house – from vehicle purchase to inspections, and ultimately delivery to the home.”
The Sydney-based company hopes to tap into an addressable market worth more than $100 billion in Australia.
It notes that the current used car dealership model is highly fragmented, and only one per cent of used car transactions are currently conducted online.
CEO MacGregor points to the success of a similar platform in the US called Carvana, emphasising the Tiger Global investment is indicative of a global trend with more than $10 billion in capital raised in the category in 2021 to date.
"Investment in the digital used car dealership space is very active globally, given the international success of the model,” MacGregor said.
“Having this significant backing from Tiger Global has been a fantastic vote of confidence in Carma and allowed us to move rapidly to build out an exceptional team, technology stack and physical infrastructure. We skipped the start-up phase and were able to go straight to scaling up with a proven business model.
“We’re excited to launch the platform, and continue our discussions with investors as we head into 2022 with big plans to rapidly expand our operations.”
With its first inspection and reconditioning centre in Alexandria now fully operational, Carma is planning to launch its platform to Sydney customers. Expansion to regional New South Wales will follow, ahead of the establishment of operations in Brisbane and Melbourne in 2022.
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