It’s been over 7 months since we first heard about Carwale.com raising $7 million from Sierra Ventures, and almost six months since CEO Mohit Dubey first publicly disclosed the funding at a Startup Saturday, though he didn’t mention the investors then.
The money appears to have taken a long time coming, and Carwale has now announced that they’ve raised upto $7 million from Sierra Ventures, in a Series A round of funding. So the money’s in the bank now. Remember that Carwale had reportedly sold 30% stake to SeedFund, an early stage investor, and it is worth noting that Sierra Ventures is one of the investors in SeedFund; Dubey told MediaNama that SeedFund had introduced them to Sierra Ventures.
Have promoters sold out majority stake?
Industry sources put Carwale’s valuation at around Rs. 48 crores, and suggested that they’ve sold around 25-30% stake to Sierra. Dubey declined to confirm the valuation and how much stake they’ve sold, but said that this has been a fresh issue of capital. He also declined to comment on whether the promoters still hold a majority stake in the company, and refused to disclose Seedfunds current holding in Carwale.
On revenues, targets and leads:
Carwale closed the last financial year with revenues of a little less than Rs. 4 crores, but on a profitable note. When we checked with some investors some 3-4 months ago, they were targeting around Rs. 15 crores for this fiscal, though Dubey did not wish to comment on the revised targets. Carwale is believed to be the leader in the auto classifieds business, though Dubey says that the main revenue stream is media sales (advertising). We’ve heard from agencies that some car companies have cut digital spends completely, and Dubey confirmed that there’s been a cutdown in the ad budget and lesser number of cars being sold. However, they do claim to have some deals in the pipeline – pilot projects with leading manufacturers.
The company claims to generate around 6000-7000 leads a day, of which around 50 percent are passed on to clients – usually auto and finance companies. Interestingly, the auto classifieds part of the business appears to be relatively small – Dubey says they charge Rs. 750 per listing, and it accounts for around 10 percent of their overall business.
Interestingly, Dubey believes that this round of funding will take the company to an IPO, and they won’t need to raise another round of funding.
Related:
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11 Comments until now.
Nikhil,
Didn’t get the math of 48 cr valuation with 25-30% dilution.
If 48 Cr is pre-money valuation, post-money valuation will be 80 Cr. ($7mn = Rs 32 Cr) Now, for 32 Cr, the ownership translates to 40%.
Or am I missing something very basic?
Tough to believe that startup can raise 7 Mn in this economy, there must be something which we are not looking at but can drive the valuation or growth story of the company.
Appreciate if you give more analysis.
How are competition, is any other auto focused startup funded. Or Carwale.com is only one with enough money to run even faster.
For 30% at 7 Mn, it will be around $16 Mn pre and 23 post.
Hi Nikhil
I agree with Shashi.
Shashi: we’d heard 48 cr pre-money valuation. The deal has been in process for at least 7 months (which is when we heard of it first), so would also depend on Rupee-dollar conversion at that time. So at Rs. 40 to the dollar, it would be 35%. You’re right – something doesn’t quite fit.
He declined to talk about valuation. I does appear that with Seedfund not diluting and Sierra’s large investment – the Seedfund-Sierra combine probably have a larger stake than the promoters. So would they like to raise another round?
Rahul: the deal was done a few months ago, but the money hadn’t come in. So $7 million, when the economy wasn’t this bad. Also, check the “Related” link to Zigwheels for an industry perspective.
Hi Nikhil
Either valuation is 106 Cr @ 30 % dilution,
or
Dilution is 66% @ 48 Cr valuation.
Please correct me if m wrong.
It can’t be 66% at 48cr, because then promoters have little stake left and no investor want promoters to dilute to an extent that they loose interest in capital gain.
And it can’t be as high as 106 cr. Should be some where in between. My feeling is that promoters with all this round will still have around 40 to 50% stake. which is good, even when they raise another round for 30% more, as to still hold 30 to 35% post that.
But with all this, one thing is sure: CarWale did a fairly good job. Right timed too….. raising money and good valuations will be increasingly difficult.
Also Sierra is a good firm, note that they invested in travel leader makemytrip and they would by now understand consumer internet in India. So can’t do a deal which is not equally good to them.
Hope companies and investors get more transparent about their deals. :)
This is good news for the industry but is it really that good for carwale? Just heard that the only Sr Ad sales guy Akhilesh Kumar – North Head has quit the company. With Akhilesh’s departure there is virtually no one left in the sales team. At one place the company claims that its main source of revenue will be media sales and on other end there is no sales team, then how the revenues will be generated is a big question.
Rahul: Agreed. Any which ways 32 C is a huge investment. I think apart from scaling up pesent operations there must be some new plans..maybe having touchpoints and brokering the deals themselves, so as to encash the credibilty of the brand.
About 3000 new cars get sold in India daily, see http://www.wheelsunplugged.com/ViewNews.aspx?newsid=1557.
What’s carwale’s conversion on those 6000 leads, one wonders…
fuckin bullcrap