CarDekho raises $100 million in latest investment round
The funding round led by Sequoia Capital’s global growth fund as well as existing investor Hillhouse Capital, values the Gurgaon-based firm at $400-$500 million.
The investment will be led by Sequoia Capital’s global growth fund, which is pegged at a massive corpus of $8 billion, according to three sources aware of the transaction. Existing investor Hillhouse Capital is also participating in the round, said one of the persons.
The investment values Gurgaon-based CarDekho between $400-500 million, according to the people cited above. The valuation is higher, though not significantly, than the $360 million ascribed to the firm when it last raised capital in 2016.
CarDekho and Sequoia Capital did not respond to email queries sent by ET till press-time. For its global growth fund, Sequoia Capital has already received commitments worth $6 billion, global news reports had said earlier this year.
CarDekho is one of its earliest investments in India from Sequoia Capital’s global growth fund which is looking to invest in late-stage bets in the country along with some in Southeast Asia and the United States.
CarDekho’s investment comes after the firm’s bet on growing allied business verticals such as financing and insurance for the used-car segment to churn growth paid off in an otherwise slowing online auto classifieds market in India.
Investment bank The Rainmaker Group is running the mandate for CarDekho for its fund raising process.
The two verticals have added significant heft to the firm’s balance sheet with FY18 revenues growing about 40% to come in at Rs 160 crore from Rs 114 crore last year, ET had reported last month. The firm also managed to almost halve its losses to Rs 70 crore from Rs 135 crore in FY17.
The growth has been driven by the used car business where an end-to-end transaction model specifically for the financing and insurance businesses has seen the firm scale significantly. The used car business itself forms about 20% of the overall revenues for the Capital G (Google Capital) and Tybourne Capital-backed firm.
Interestingly, Sequoia Capital is also an investor in Cars24 which competes with CarDekho in the same space. While CarDekho and CarTrade operate as marketplaces, Cars24 follows an asset-heavy customer-to-business (C2B) model, where it buys used cars from individuals and dealers and sells them to other dealerships.
The online classifieds business model based on listings and lead generation has been a difficult one to monetise at scale in India and has seen several traditional businesses such as Quikr, Olx shift to a transaction-led business, especially in the auto vertical to scale revenues, ET had reported previously.
For auto classifieds players such as CarDekho and CarTrade as also Cars24, financing and insurance within the used car space have become the core focus areas of growth over the past 18-24 months owing to better margins and large scalability potential.
Over FY18, CarDekho’s financing business included loan disbursements worth over Rs 1,000 crore.