Used cars online marketplace borrows $30 million as it ponders going public

Sydney online used car marketplace Carma has borrowed $30 million in a convertible note as it contemplates the possibility of an IPO.

The funding round was led by ASX-listed Regal Funds Management and existing investor Tiger Global, with support from General Catalyst, Australian private equity manager Five V.

Regal likes to invest in companies as they prepare for a public listing.

Carma will use the funds to expand its vehicle inventory and production facilities, where a team of more than 50 oversee the inspection and reconditioning process.

Last year the business sold 2000 cars generating $68 million in revenue – an average of $34,000 a car. It’s now had more than 5000 customers.

The online buying experience includes integrated financing, and free home delivery or pick up of the car.

The online car reseller kicked off with a bang in 2021 with a $28 million seed round in March that year led by Tiger, followed by a $75m Series A in May 2022.

Cofounder and CEO Lachlan MacGregor said that until Carma, buying a used car has been frustrating and uncertain.

“We’ve changed that by combining technology, data, and a customer-first approach to deliver a seamless, transparent, and quality online car-buying experience,” he said.

“This investment enables us to scale even faster, expanding our inventory, enhancing our digital destination, and setting a new benchmark for trust and convenience in the industry.”

Regal portfolio manager Jessica Farr-Jones said Australia’s pre-owned car market is ripe for disruption.

“With a seamless online platform, top-tier production facilities, and an AI-enabled tech stack, the Carma team has redefined the car buying experience for Australians and we expect them to continue to take market share from the traditional offline channels,” she said.