€5m funding for online used-car dealership Spotawheel
Online-only used-car dealership Spotawheel has raised €5 million in a new funding round led by Venture Friends. With a business model similar to Carvana in the US, Athens-based startup Spotawheel currently operates in Greece and Poland.
Besides Venture Friends, funding participation came from Velocity Partners and unnamed strategic investors. The investment includes both equity and debt financing - the latter is especially relevant since Spotawheel’s business model is based on upfront purchasing of used vehicles. Including this round, the startup has raised €8 million since its launch in 2016.
The global used-car market is growing at a rate of 5-7% per year, “yet it is still primarily operating offline in a notoriously non-transparent way,” remarks Spotawheel co-founder and CEO Charis Arvanitis.
The danger of complicated processes, the risk of hidden fees, the fear or fraud, and the reality of fragmented supply all conspire to create a market that is handicapped by the suspicions of prospective buyers. Yet new technology offers a way out these drawbacks endemic to the off-line used-car market.
Even though we’re a few decades into the digital revolution and the advent of online trading, the fact that used-vehicle market is dominated by a hugely fragmented seller structure has prevented the emergence of “meaningful innovation”, Mr. Arvanitis says. “That problem is even more evident in Europe, where car trade flows between countries make it much harder to control quality and trace car histories.”
Spotawheel is designed to answer these concerns. It offers an online B2C platform that - according to Mr. Arvanitis - has redesigned the buying/selling process from scratch, resulting in a frictionless, trustworthy buying experience. The startup aims to bring used-car trading to the levels of convenience and protection that consumers have come to expect from their (other) e-commerce transactions.
Spotawheel customers can opt for a test drive or have the vehicle delivered to their doorstep, with a seven-day return policy - with the addition of a five-year limited warranty. “That’s the largest in Europe,” says Mr. Arvanitis. That warranty is underpinned by Spotawheel’s predictive analysis, which provides an analysis of each individual vehicle’s condition… and it expected failures.
Spotawheel’s car sourcing model combines both debt-financed and marketplace practices, allowing the startup to source the best cars from private owners and B2B resellers across Europe, Mr. Arvanitis explains.