InstaCarro, a startup founded by the Argentinean Luca Cafici that connects used car sellers to dealers in Brazil, has just announced a BRL 115 million Series B round led by U.S. funds J Ventures, FJ Labs and Rise Capital and followed by the funds All Iron Ventures and Big Sur, from Spain, among other investors.
Founded in 2015 and operating only in São Paulo city, InstaCarro has already handled more than BRL 1 billion in sales with a C2B solution through which used car sellers can offer their vehicle to a network of more than 4,000 buyers, including dealers and resellers. The vehicles are sold in online auctions. The sales are made within 24 hours and the entire procedure (documentation, transfer, payment) is up to the startup.
With the newly injected capital, the startup will invest heavily in expanding the operation in São Paulo city and in debuting in Campinas, Curitiba, Joinville, Santos, Brasília, Goiânia, Rio de Janeiro, and Belo Horizonte.
Also, the company does not rule out launching a new B2C service to sell used cars within the platform. That’s because, explains Cafici, 50% of the startup‘s individual customers don’t just want to sell a car, but also to buy one. “In addition to a good vehicle selling experience, we want to offer a good buying experience,” he said.
20% growth per month during the pandemic
InstaCarro‘s round comes in the wake of the Brazilian used car market heating. After a setback in April, May and June last year, sales of used cars started to grow again in the country in July. In the first half of 2021, sales were 63% higher than those recorded in the same period last year, according to a report released in June by the National Federation of Automotive Vehicles Distribution (Fenabrave in Portuguese).
Data compiled by another entity, the National Federation of Associations of Automotive Vehicle Dealers (Fenauto in Portuguese), show that in the first half of this year the market not only recovered from the decrease in the first months of 2020 due to the pandemic but has already surpassed the performance of 2019 – the average daily number of vehicles sold in the country went from 54,802 in 2019 to 58,944 units in 2021.
Following the industry trend, InstaCarro also saw its operations pullback in the first two months of the pandemic last year, but soon returned to growth. “In the beginning, we felt the setback, because both we and our customers had to close physical stores. And at that time, our physical store channel was very strong, customers valued that experience,” Cafici says.
So, the startup made adjustments in the operation to maintain the growth pace, expanding the personalized residential service channel for vehicle evaluations and investing in improvements to the online experience.
With these adjustments and a greater focus on digital, the startup claims to have been able to maintain a growth of 20% per month and to have increased its profitability by up to 10 times compared to pre-pandemic rates. The company does not reveal absolute numbers for the operation. Cafici says investments in technology and the online experience will continue.
How it works: online auction
InstaCarro‘s business model includes the platform and an in-person service structure, which has physical stores and inspectors. When a customer decides to sell his vehicle, he can choose to take the vehicle to one of the physical stores or receive a professional at home for the vehicle inspection, in which more than 150 items are evaluated, from aesthetics to mechanics. With this evaluation, InstaCarro defines the minimum price of the vehicle for auction.
The great advantage of the auction, according to Cafici, is that there is no general consensus about the value of a used vehicle. Each car is a car. The auction makes it possible for the same vehicle to receive varied bids from varied buyers until the best offer is reached.
Before becoming an entrepreneur, Cafici worked at a car classifieds startup in Asia, which gave him some insights into the process of negotiating and selling vehicles. “The process of selling a used vehicle, besides visits, of negotiating values, is subject to dropouts, fraud, bureaucracy. Our purpose is to make the sale faster, safer, and more financially advantageous. For the individual, our value proposition is security and a competitive price. And for retailers, the possibility of buying vehicles in scale”, he explains.
The user experience, whether an individual or a company, is a constant concern for InstaCarro. The startup handles all stages of the offer and sale, so that seller and buyer have no contact with each other: “It is a market that has a lot of informality and insecurity, so we shield both parties. If the car has some problem after the purchase, which was not identified during the inspection, we take responsibility. In the same way, if the shopkeeper, by chance, gives up the purchase, we take responsibility”.