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Contxto – Brazil’s leading used vehicle brokerage, Volanty, recently raised R$70 million (approx. US$17.8 million) in a round led by SoftBank and Kaszek Ventures. monashees and Canary Funds also contributed, effectively placing bets on an industry worth an estimated R$400 billion.
As part of Volanty’s third funding round, the new capital will go towards accelerating the company’s growth. Plans include launching new appraisal centers, hiring personnel such as industry executives, as well as developing new technologies.
Not long ago, Canary and monashees led a round worth R$19 million last year, meaning this is a follow-on for them. Prior, Canary also invested R$2.5 million in 2017 that went towards developing the platform, hiring and training of workers, in addition to infrastructure.
Back in the day, Volanty only accepted automobiles under six years old with less than 100,000 kilometers driven. Now, cars produced from 2,000 onwards with any mileage are accepted into the marketplace.
With new horizons comes new projects. One potential area for expansion is fintech collaboration. That’s to say, Volanty is reportedly discussing partnerships with intermediary credit financial groups to support users in purchasing vehicles.
Volanty’s recent investment reinforces the bullishness of this fragmented market where a variety of second-hand dealerships compete, generating around R$400 billion a year. The industry sold over 14 million pre-owned cars in 2018, according to Fenauto, the national car dealership federation.
While most online dealerships are purely digital with a classifieds portal, what makes Volanty stand out from the competition is its supplemental physical units. These spaces are where users can inspect vehicles, verify pricing, take photos, place bids and provide the necessary transfer documentation.
As of today, there are nine physical appraisal centers in São Paulo and three in Rio de Janeiro. Two more may arrive in São Paulo by the end of the month, with more expected later down the road.
Buyers receive a one-year warranty on cars while Volanty charges a 7 percent fee from the transaction.
Trends in the making
Volanty’s business model improves the supply chain for both car buyers and sellers. For buyers, it provides quality assurance with its transparent purchasing process and no hidden fees. It also eliminates middlemen such as stores and dealerships to maximize cars’ selling value.
Similarly, the selling process involves photo inspection and fair price negotiation. This is where the physical appraisal centers come into the picture, thus presumably innovating its e-commerce model. In the end, both parties benefit from less bureaucracy and autonomy.
Understandably, this model has allegedly been replicated by other startups in other regions. Gradually catching on, the startup proves how technology can effectively connect car buyers and sellers.
Another emerging trend is SoftBank’s “soft spot” for repossessed car companies. Earlier this year, the Japanese megabank invested US$1.5 billion in Chehaoduo Group, the owner of Guazi, China’s largest used car website. This brought the company’s valuation up to US$10 billion.