Online automotive auction portal MotorExchange has raised a second round of funding from Epiphany Ventures and existing investor Canaan Partners. The funding will be used by the firm to put in place a senior management team and also beef up its certification business. In its Series A round of funding in December 2009, Motorexchange received some $2-4 million from Canaan Partners. Other investors in MotorExchange include Austin Ligon, Founder CEO of CarMax USA. Ex-eBay India head Rajan Mehra is a founder-director on its board.
While the company did not disclose the size of the round, an Economic Times report pegged it at $5 million.
Gaurav Saraf, Director, Epiphany Ventures, said the deal saw equal participation from both VCs. This deal marks the second investment by early stage investment firm Epiphany Ventures, which runs a $25 million fund. In July, it co-invested $6 million in Blackstone spinoff iLevel Solutions, which offers private equity software and reporting. The fund is currently looking at group buying, retail, travel as well as B2B SaaS segments. Rishi Khosla, CEO, Copal Partners advises the seed fund.
Launched in December 2009, MotorExchange is an ecommerce platform with two businesses: – online auction for used car dealers (where they can sign up for a fee to bid for cars) and auto classifieds (following its acquisition of CarTradeIndia.com in August).
MotorExchange CEO Vinay Sanghi told VCCircle he intends to get 5,500 dealers of the 15,000-17,000 across India onto the platform by 2015. Besides the company will continue to look at acquiring online automotive sites in India, he added.
Alok Mittal, general partner at Canaan and on the board of MotorExchange said, “With MotorExchange, we have validated assumptions that customers will buy online and sellers and buyers are willing to participate in online auctions. The company is still at an early stage – we will be testing out consumer behaviour. Last year, we tested the B2B opportunity and now are focussing on the C2B side, where we directly source vehicles from consumers. MotorExchange has a comprehensive certification process set up for this.”
In 2008, the used vehicle sales in India was worth approximately $11 billion. Saraf estimates this will reach $40 billion by 2015 adding that websites such as MotorExchange will be the catalyst that make the process more transparent, enabling more online auto sales. “In its very first year, it (the portal) has managed to place auto inventory worth Rs. 1000 crore,” said Saraf. By 2015, Sanghi expects this to rise to Rs 6,000 crore.
MotorExchange currently employs 70 and expects this to rise to 225 by 2012.
With the unorganised industry still is the biggest competition, MotorExchange peer group includes other automotive portals in India such as eBay Motors, Autojunction.com, Carwale (in which Axel Springer and the India Today group picked up a 70.4% stake in December), Autoindia.com, Carazoo.com, Gaadi.com and Zigwheels.com.