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:

– Where Is the Times Group Going With ZigWheels.com?

– AOL India has launched an Autos section, which, by the looks of it, is being powered by AutoIndia.com. The site offers videos, tips for buying cars and bikes, has reviews. From a business perspective, the site features vehicle listings and loans and insurance. We’d explained the auto portal business model here.

ZigWheels, an auto portal from the Times of India Group (BCCL) has gone live, in beta. The site features, on the content side, Motorsport News, Reviews, Launches, and a gallery. They’re offering users Wallpaper and screensaver downloads.

On the business side, they’re allowing users to search for used and new cars, take tips from experts, a market-price checker, an EMI calculator, insurance and loan.

Standard Auto Portal Revenue Streams
The auto portal business is traditionally a lead generation model, and on-site advertising hasn’t been a significant contributor.
Lead Generation
– On Used Car Listings
– Test drives for New Cars
– Car Insurance
– Car Loans
Advertising
– On website
– On Magazine/publication (if any)

(note: if there are others, please leave a comment)

A Fortnightly Newspaper? Where Does Top Gear Fit In?
Do a search at the the Registrar of Newspapers for India, and you’ll notice that the Times Group has registered (screencap) fortnightly newspapers with the following names - ET Zigwheels, Times Zigwheels, Times Zigwheels.com, Times Zigwheels.in, Zigwheels, Zigwheels.com and Zigwheels.in.

While this could be similar to just blocking domains to prevent squatters, there are instances of auto portals with publications. For example, Carwale.com has a used car price guide that is distributed among auto dealers.

At the same time, the Times of India group does have a joint venture with BBC Worldwide - WorldWide Media (WWM) - which pubhishes Top Gear, based on the iconic TV show hosted by Jeremy Clarkson.

Where do they go from here?
Offline appears to be the way to go - an on-ground presence is necessary to build relationships with dealers, who provide used car listings, and pay for lead generation. Content is fast becoming a commodity in this market, and perspective and tips will help establish relationships with users; Tips and tricks, advice from experts and usability will be differentiators. Of course, nothing works as well as word-of-mouth from a happy customer.

Note that Autocar India and Overdrive are car and bike publications with portals, and they haven’t really leveraged their brand (and TV shows) online. Should we expect a ZigWheels TV show on Times Now?

It will be interesting to see how car companies, who are advertising on some of these portals (listed below), react to negative user reviews online.

List of Auto Portals
AutoCar (Magazine, TV Show on UTVi)
AutoIndia (Angel Investment)
Automart India
Bharatautomobiles
Carazoo
carsalesindia
cartradeindia
Carwale (30 percent equity with Seed Fund)
DriveInside
Gaadi
indiaautomobile (Consim/Bharatmatrimony Group)
Indimoto
Insibeam
Overdrive India (Infomedia India Magazine, TV Show on CNBC-TV18)

Disclosure: I own an inconsequential number of shares of Network18. Also, I am related to Vivek Pahwa, who has launched Gaadi.com