A $160 million Series C funding round which brought the total funds raised to nearly half a billion dollars was completed by online used-car startup Carvana, known for delivering vehicles through vending machines. The company made this announcement.
While declining to part with much of the investor details, along with existing and new investors, the funding was led by a U.S. institutional investor, the company said.
Carvana has plans to double its inventory to more than 10,000 vehicles and wants to increase the number of markets within the US that it operates in from 15 at present to more than 20 markets by the end of this year and the company intends to put these plans on the ground with the funds raised. The company was set up in 2013.
Automated towers holding several cars are operated by the company. A customer can either pick up a car from the “vending machine” or have it delivered after having bought the car online.
Customers get a coin at the machine where they are given a coin after the customers enter their details on a tablet at the towers. The ordered car is automatically delivered from the machine when the coin is inserted into the machine by a customer.
With an average savings of $1,681, Carvana is arguably the first complete online auto retailer offering vehicle purchase in as little as 11 minutes.
The current valuation of the company stood at a premium of more than 50 percent to the previous fundraising round, Carvana said but it did not disclose its valuation during the latest round of funding and the final valuation in absolute terms of money.
Chief Executive of the company, Ernie Garcia said in a statement, that had the economic environment been better, Carvana’s valuation would have probably been a little higher than what it ultimately ended up with.
In 2015, revenue of $140 million was reported by the Phoenix-based Carvana. Revenue of more than $350 million in 2016 is being projected by the company.
The business strategy and the ability of online used-car startups of delivering cars to a buyer’s home and providing online financing has become quite popular and business is increasing. And this has allowed even the rivals of Carvana to raise millions in funding and hence the competition in the segment is palpable.
Investors including T Rowe Price and Priceline Group Inc Chief Executive Jeffery Boyd have invested more than $168 million so far in the New York-based Vroom, a rival of Carvana. Revenue of $900 million in 2015 was reported by Vroom which had also been launched in 2013.
With the latest round of $70 million led by China’s biggest automaker, SAIC Motor Corp, another Carvana competitor, Los Altos, California-based Beepi Inc, had raised about $149 million as of the end of June. While another rival Beepi did not reveal its revenues for 2015 but said that it has increased revenues by more than 10 times. This company was launched in April 2014.
(Adapted from Reuters & Businesswire)