Australian online used car dealership, Carma, has revealed it raised the largest seed round in the nation’s history, having received US$20m (AU$28m) in funding from Tiger Global.
Carma is in the final stages of launching its online platform and the company is already in discussions with investors to raise funds to support its accelerated expansion in 2022.
Carma attracts record breaking seed funding
Operating in stealth mode for the past nine months, Carma is following a business model which is disrupting the used car industry both in Australia and around the world.
Customers leveraging and harnessing Carma will be able to search, buy and finance quality, reconditioned pre-owned vehicles which will be delivered directly to their homes.
Unlike online classifieds and marketplaces, Carma will own the vehicles and offer a complete end-to-end digital purchase process, with instant finance through leading fintechs.
The investment from Tiger Global has funded the recruitment of an exceptional executive team with expertise across technology, automotive, finance and customer experience.
Carma has developed an intuitive and customer-centric website, supported by robust and scalable infrastructure to establish its first inspection and reconditioning facility in Sydney.
Carma set to disrupt used car market
Carma Co-founder and Chief Commercial Officer, Yosuke Hall highlighted Carma’s aspirations.
“Carma aspires to be the trusted leader in Australian used cars. A car is a valuable asset owned by most Australians but the current buying experience is time consuming and frustrating.”
“Carma is laser-focused on bringing ease, trust and joy back into used car buying.”
“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.”
In Australia, 4m used cars change hands annually, with an estimated market of over $100bn.
The local landscape of more than 5,000 used car dealers is highly fragmented, meaning inventory is geographically dispersed and difficult for customers to access.
Only 1% of used car transactions are currently conducted online.
The online dealership model, pioneered by Carvana in the United States, has been successfully launched in most major markets globally, but has not yet become established in Australia.
The record-breaking seed investment in Carma by Tiger Global is indicative of a global trend, with more than A$10bn in capital raised in the category in 2021 to date.
Carma Co-founder and CEO, Lachlan MacGregor said, “Investment in the digital used car dealership space is very active globally, given the international success of the model.”
“Backing from Tiger Global is a fantastic vote of confidence in Carma and allows 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.”
Comments from Carma’s stakeholders
Griffin Schroeder, a Partner at Tiger Global expressed optimism with their investment.
“There is a massive opportunity to disrupt the used car industry in Australia by replicating an online, full-stack model that we see achieving success in the USA and globally.”
“We are excited to support the innovative Carma team as they enter this next phase of growth.”
Tiger Global’s representative and Carma Director, Jason Lenga also approved the investment.
“The online used car dealership model has been a disruptive force across the globe, and Carma is set to do the same in Australia. We are enormously impressed with the team that has been assembled and with what they have achieved in such a short period of time.”
“Carma’s impressive focus on exceptional customer experience will revolutionise strategies on how Australian drivers buy cars by giving consumers a digital brand they can trust.”
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.
