InstaCarro, a digital marketplace that connects used car sellers with dealerships in Brazil, raised $ 23 million in a Series B funding round.
Notably, US-based companies co-led the investment, including J Ventures, FJ Labs, and Rise Capital. Spanish companies All Iron Ventures and Big Sur also participated in the financing, among others. With the latest round, São Paulo-based InstaCarro has now raised over $ 56 million since its inception in 2015.
As we all know, the COVID-19 pandemic has led to an increase in the number of people around the world buying and selling things online, with cars being no exception. InstaCarro plans to use its new capital in part to capitalize on the change and “aggressively” expand its reach in Brazil.
Until this year, the startup only operated in São Paulo. In the first half of this year, it launched operations in eight new cities and is now also present in Campinas, Curitiba, Joinville, Santos, Brasilia, Goiânia, Rio de Janeiro and Belo Horizonte.
For context, the startup compares to Carvana in the United States, Chehaoduo in India and Carro in Indonesia.
CEO Luca Cafici launched InstaCarro after co-founding an auto classifieds startup in Asia with Rocket Internet. This experience, according to Cafici, taught him that “car classifieds do not solve the problems people face when selling their own cars.”
Inspired by Auto1’s early success in Europe, he decided to return to Latin America to build a similar model, initially focusing exclusively on Brazil, as it is the third largest automotive market in the world.
Today, InstaCarro is one of the biggest buyers of used cars in Brazil, according to Cafici. Since its inception, the company has processed over one billion reais, or US $ 193.2 million, working with more than 35,000 people seeking to sell their cars to dealerships. The startup has grown 21% month-over-month since COVID started and has been profitable since 2019. Profitability is almost 10 times higher than pre-pandemic levels, Cafici said.
Going forward, InstaCarro aims to become a “full-service” car exchange platform after hearing from customers that they would also be interested in purchasing a car directly through its platform.
In its current model, the process seems straightforward. When a customer sells their car through InstaCarro, the company comes to their home to inspect the car, taking over 150 photos, and then sells the car at auction through its network of more than 4,000 dealers across Brazil. Customers receive an offer for their car within 24 hours, and InstaCarro pays the customer the same day and handles all documents, according to Cafici.
“The auction is a key part of getting a good price, because there is no agreement on the true value of a used car,” he added. “The more you talk to resellers, the higher the price you get.”
The startup also plans to use its new capital to “improve the coverage” of its home inspection model and improve the efficiency of its digital auction process, Cafici said. Of course, she also intends to do some recruiting. InstaCarro has 120 employees and plans to double that number by 2022.
Before the pandemic, the company had partnered with large supermarket chains to create inspection points. But with the onset of the pandemic, he began inspecting cars at vendors, which has been found to help the business move and grow faster, Cafici said.
“The pandemic forced us to reinvent our economic model. Before the closures, most of our operations depended on central inspection sites, which we had to close overnight in March 2020, ”he told TechCrunch. “For our customers, our dealers and our team, the past year has been difficult and frightening. Our team has worked hard to reinvent our business model around home inspections, so that we can continue to do business safely. We started going down the aisle to our customers instead of having them come to an inspection site.
Today, more than 90% of the company’s customers choose to do everything online.
John Nordin of J Ventures said his company was impressed with how the company changed its business model after the COVID hit and that it is “now growing faster than ever.”
“We are seeing digital auto dealerships succeeding in markets around the world, from the United States to the United Kingdom, to Indonesia and Mexico,” said Nordin. “The team or teams building a digital car dealership in Brazil have a lot of work to do, not only figuring out how to make the model fit for Brazilian consumers, but also dealing with the operational challenges of buying and selling. a huge volume of cars every day. InstaCarro has the right team to meet the challenges ahead.