Used vehicle exchange platform MotorExchange has raised series A round of venture capital funding from Canaan Partners. MotorExchange, which provides sellers and buyers a platform for transacting used vehicles, targets dealers, institutional and individual sellers. The company charges a fee from buyers and sellers on these transactions.
Though Canaan declined to disclose the exact investment details, it is believed to be in the range of $2-5 million for a significant minority stake.
MotorExchange has been founded by former Mahindra First Choice CEO Vinay Sanghi and ex-eBay India head Rajan Mehra. Sanghi is currently the CEO, and Mehra, currently a venture partner at Clearstone Venture Advisors, is the founder-director. Alok Mittal, general partner at Canaan, is joining the board of MotorExchange.
"The funds from Canaan will be used to enhance the functionality of the product and operations of the company," said Sanghi. The company launched its portal MotorExchange.in only days ago.
"Used car trade in India is a large, disorganised market and deals happen through local mom & pop stores. There is very little transparency and reliability in the process," said Mittal in an interview.
MotorExchange has tied up with 12 banks and NBFCs like ICICI Bank, HDFC, Mahindra & Mahindra Financial Services as sellers on its platform. Sanghi says, there are about 14,000 used car buyers in India, and his company has already signed 800. He expects to increase this number to 2,000 in the next 12 months.
MotorExchange will operate on a B2B and C2B model. It also acquired CarTradeIndia, a car trade portal which operates in the C2C and B2C space, in a stock deal in August this year. This will help MotorExchange attract sellers from CarTradeIndia on its platform. CarTradeIndia continues to operate as independent website, and is now a division of the company.
The sale of used vehicles stood at approximately $11 billion in 2008 and is expected to double to $22 billion in the next five years, said Canaan, in a release. Of this, 60%- 70% is expected to go through the used vehicle auction platforms such as Motor Exchange. The banking segment alone sells Rs 2,000-2,500 crore of repossessed inventory every year, adds Sanghi, who has been in the used car business for 10 years.