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INTERNET | eCommerce / Auto

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Stage

Seed | Alive

Total Raised

$20M

Last Raised

$20M | 1 day ago

About Carma

Carma operates as a used online car dealership based in Sydney, Australia.

Carma Headquarter Location

Sydney, New South Wales,

Australia

Latest Carma News

Record funding for virtual car yard that gets rid of used car salesmen

Dec 6, 2021

Dec 6, 2021 – 11.00pm Share Early Afterpay investor Tiger Global has led a record Australian seed funding round of $US20 million ($28 million) in Carma, a start-up trying to get people to buy used cars online without touching them first, or speaking with a dealer, by creating a virtual car yard. Tiger is betting that Carma founders Yosuke Hall and Lachlan MacGregor can convince Australians to purchase the second-largest asset most of them will ever own in the same way they get takeaway delivered, based only on an online inspection. Carma will use a 360-degree camera featuring 1500 LED lights to give online buyers an immersive tour of the car they are interested in. Rob Homer It is following the end-to-end online model already taken to unicorn valuations by Carvana in the US and Cazoo in the UK. “Everyone’s become used to buying everything from groceries to appliances online, and we think cars are just an extension of that,” Mr MacGregor said. Carma employs 100 people to purchase used cars from individual sellers or auction houses, then inspect, recondition and warehouse them at a 50,000 square metre facility it is leasing at Alexandria, in Sydney’s inner-south. Advertisement That facility is equipped with a 360-degree camera featuring 1500 LED lights, which Carma will use to give immersive tours of its cars, including of any imperfections, on its yet-to-be-launched e-commerce site. Customers will have to buy the cars through that site – there is no opportunity to view them pre-purchase in real life. However, once a Carma truck delivers the vehicle to the buyer’s door, they will have seven days to request the truck come and take it away again, for a full refund with no questions asked. Trudging around dealerships “Over the last 20 years we’ve seen the way people research used-car purchases move online, but the actual purchasing process has never changed,” Mr Hall said. “You spend your weekend trudging around dealerships, which typically stock about 20 used cars each, and then you get a 15-minute test drive with the dealer sitting next to you to decide if this is the car that’s going to meet your needs.” The founders are hoping that the convenience of having a professionally re-conditioned car home-delivered, followed by a seven-day “test drive” (even if they’ve technically already purchased the vehicle) will overcome hesitancy towards the new model. Advertisement Some of Tiger’s funding will soon be used on a marketing campaign, as Carma attempts to build a trusted brand which the founders argue is lacking in the fragmented used-car market. A large inventory was also key to attracting customers to Carma, Mr MacGregor said, flagging a planned debt raising early in 2022 to help the start-up increase its number of cars for sale from 300 now to “several thousand”. Carma will also offer financing, white-labelled through fellow start-ups in the fintech space. Expansion to regional New South Wales, Brisbane and Melbourne is planned to follow an imminent launch in Sydney, although Mr MacGregor said Carma was already operational there in “beta” mode, through contacts in the used-car industry. Mr MacGregor left his former day job as a portfolio manager at global equity investor Alphinity in March. Mr Hall was previously chief executive of home furnishings e-tailer Zanui, which went into administration in 2019. He said he faced “internal constraints” at Zanui which did not apply to his partnership with Mr MacGregor. The founders would not disclose the valuation at which Tiger’s $28 million investment was struck. Michael Bailey writes on entrepreneurship and the arts. He is also responsible for the Financial Review's Rich Lists. He is based in Sydney. Connect with Michael on Twitter . Email Michael at m.bailey@afr.com Save

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