Used car demand drives Sydney start-up Carma’s $73m funding round

Online car sale sites are billion dollar businesses overseas and this Sydney start-up says it is next in line as it expands across the country.

Carma co-founders Lachlan MacGregor and Yosuke Hall. Source: Supplied.

Fresh from landing the largest seed funding round in Australian history 12 months ago, online used car platform Carma is expanding nationally, fuelled by a $73m funding round and buoyant consumer demand for second-hand vehicles.

Online used car platforms have become billion-dollar businesses in the US and Carma chief executive and co-founder Lachlan MacGregor says there’s no reason his start-up can’t do the same.

With the pandemic straining supply chains for microchips, demand for used cars has skyrocketed.

Global venture capital firms General Catalyst Partners and Tiger Global have poured in to a $US52m ($73m) Series A funding round, at an undisclosed valuation, along with Australian investors including Five V Capital and family office Terrace Tower Group.

Other international venture investors joining the round include Entrée Capital and Avenir Growth, who have backed online used car portals in Europe and India.

“We have a real opportunity to transform this industry in Australia,” Carma co-founder Yosuke Hall said.

“What we do differently is leverage technology and we’ve started from a plain sheet of paper in terms of how the used car model should be operating. The traditional dealer model has been operating a certain way for a long period of time, and dealers are typically hyperlocal. We are building a brand that can deliver cars to anywhere in Australia, and we’re building a national brand that people can rely on and trust.”

Based in Sydney, Carma’s platform offers fixed prices and delivers cars to a customer’s home, with integrated finance and an in-house inspection and reconditioning process.

“We are extremely proud of what we have built,” Mr MacGregor said.

“We have a world-class team, an industry-leading used car reconditioning facility in Sydney, and a bespoke customer-centric platform, all supporting our end-to-end digital purchase process.

“This investment will allow us to accelerate our expansion interstate and continue to develop our platform and to know that some of the most high-profile international investors with experience in this space have identified Carma as the player to back in Australia is incredibly gratifying.”

Adam Valkin, managing director at venture firm General Catalyst, said Carma is already having a similar impact in Australia to other successful platforms globally.

General Catalyst has previously invested in Australian start-ups Canva, BigCommerce and Buildkite, and as part of the investment Mr Valkin will take a seat on the Carma board.

“Success comes down to the team and ability to execute,” said Adrian Mackenzie, Partner at Five V.

“We have known Lachlan for many years and we are excited about the business that he and Yos are building. There‘s an opportunity to build a clear category leader in this market.”