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Almost one in five of India’s future unicorns drop off the race as funding winter bites

<ul class="summary-list"><li><keyword id="11892747" type="UNKNOWN" weightage="60" keywordseo="india" source="Orion">India</keyword> minted four used-car unicorns between November 2020 and November 2021.</li><li>A growing middle class and the rise of the millennial generation is driving the sector's growth.</li></ul>Ram Goswami bought a five-year-old Nissan Terrano last year after getting rid of his sedan. He'd owned the sedan for over a decade, but increasing maintenance costs and repairs started to pinch Goswami's pockets. The marketing professional, who's based in Delhi, purchased the SUV for ₹350,000 ($4,662) — less than half its market price."I preferred a used car over a new car since I'm getting a good deal," Goswami, 37, told Insider."If someone has enough money and doesn't need a loan, then he can go for a new car. But <keyword id="11939507" type="UNKNOWN" weightage="60" keywordseo="used-cars" source="Orion">used cars</keyword> are a blessing for people like me," Goswami added.Niroop Rajan, a techie from Bangalore, picked up a 10-year-old BMW luxury sedan last year for ₹700,000 ($9,318). It's his first car, and for him, owning a car is a status symbol."The emotion I felt from driving my parents in my car for the first time was overwhelming. It doesn't matter if it's a used one. I was overjoyed," Rajan, 31, said.While the two millennials live two thousand kilometers apart, Goswami and Rajan are part of a massive churn in India's automobile industry. Both Goswami and Rajan purchased used cars – a rapidly growing segment in India powered by digital disruption, newfound love from millennials, a buffet of financial options, and pandemic travel restrictions.<h2>Four new used-car unicorns</h2>It's a good time to be a used-car startup in India.For every new car sold in the country last year, about 1.4 used cars were sold, up from <a href="http://www.indianbluebook.com/storage/app/media/Insights/India-Pre-Owned-Car-Market-Report-3rd-Edition-2019.pdf">1.2 before the pandemic.</a>Between November 2020 and November 2021, four India-based startups that exclusively sell used cars became unicorns (startups valued at $1 billion or more) and minted a record amount of investment. India is home to about 80 unicorns total.The four startups – Cars24, Droom, Spinny, and CarDekho – raised over $1.5 billion total from global marquee investors. That's more than what these platforms raised in the previous five years put together, figures from their valuation announcements show.Market leader Cars24 saw its valuation nearly double within three months late last year. In September, it was valued at $1.84 billion; the latest funding round in December put the valuation at $3.3 billion. The company is expanding its global footprint with new branches in Australia and the UAE, and it's <a href="https://www.exchange4media.com/marketing-news/cars24-announces-international-expansion-now-operational-in-uae-australia-113641.html">eyeing the Southeast Asian market.</a> Those pouring the money include New York-based investment firm <a href="https://www.spinny.com/about-us/">Tiger Global,</a> American giant <a href="https://india.sequoiacap.com/india/companies/cars24/">Sequoia Capital</a>, <a href="https://economictimes.indiatimes.com/tech/funding/cardekho-enters-unicorn-club-with-250-million-funding-led-by-leapfrog-investments/articleshow/86973768.cms">LeapFrog Investments</a>, Abu Dhabi-headquartered <a href="https://tracxn.com/d/companies/spinny.com">ADQ</a>, and China-based venture capital firm <a href="https://www.cars24.com/blog/cars24-raisesi-450-million-nearly-doubles-its-valuation-to-1-84-billion/">DST Global.</a> And in December, India's star sportsman Sachin Tendulkar <a href="https://auto.economictimes.indiatimes.com/news/aftermarket/sachin-tendulkar-invests-in-used-car-platform-spinny/88276324">invested an undisclosed amount </a>in Spinny.<h2>The pandemic and millennials are behind the change</h2>The pre-owned car market started to outpace the new car market during the pandemic. The poor economic situation dented the demand for new cars, and the global semiconductor shortage prolonged the waiting period. Public <keyword id="11894924" type="UNKNOWN" weightage="100" keywordseo="transportation" source="Orion">transportation</keyword>, too, has taken a hit. "What happened in the last year during the pandemic is that the way people commute has changed," said Kushal Bhatnagar, an engagement manager at consulting and research firm RedSeer. "During the pandemic era, the usage of [ride-hailing services] Ola and Uber dropped. Shared mobility as a concept declined in India."All these factors have had an unintended spillover on the used car market, providing a jumpstart for startups like Droom, an online-only marketplace that offers fair pricing assessments and digitized vehicle histories.<div type="image" title="Droom CEO Sandeep Aggarwal" height="2661" width="3547" msid="90288740" hostid="261"></div>Droom CEO Sandeep Aggarwal said the growth in India's used-car market is driven by the country's growing middle class and the rise of a young population armed with disposable income."We get about 16 million monthly user traffic and about 75% of them come from millennials," Aggarwal told Insider. Indeed, millennials make up 80% of the buyer base for used cars, one <a href="https://www.motownindia.com/Bureau/Auto-Industry/3192/Millennials-Gen-Z-appetite-for-used-cars-on-the-rise-Cars24-Ipsos-Report-Motown-India-Bureau">industry research</a> found.The CEO added that the demand for used cars in India is reflective of a change in generational mentality."'My father had a scooter. After working for 25 years, he bought his first car at the end of his career. I don't want that. I want a car now,' is what a millennial thinks," Aggarwal said. "This aspirational value has been embedded in the generation of Indian millennials."<div type="image" title="Motorbikes and scooters lined up in India." height="2448" width="3264" msid="90288741" hostid="261"></div>The type of demand in the market is also shifting, two industry insiders said."Often what we see is someone will prefer a four-year-old gently used BMW for 1.2 million rupees ($16,000) to a brand new Honda city for the same amount," Aggarwal said."A lot of people who owned two-wheelers now want a car for their family and their obvious choice is a used one. The age group driving this growth is between 30 and 35," echoed Anurag Jain, the cofounder of CarDekho.<h2>Moving towards a focus on the user</h2>With an estimated <a href="https://redseer.com/newsletters/indias-used-car-market-is-unstoppable-with-its-steady-and-tech-driven-growth/">30,000 brick-and-mortar dealers</a> across the country, India's used-car market is a highly fragmented area dominated by mom-and-pop operations. Until about five years ago, most used-car services were seller-centric listing services. The segment was riddled with untrustworthy agents and cumbersome paperwork.But this is slowly changing. The segment is moving towards user experience-focused systems and buyer-focused business models.Consider CarDekho, a 14-year-old company that hit unicorn status in October. The marketplace offers end-to-end services such as doorstep pickup, financing options, insurance, post-service warranty, and long-term maintenance packages."In India, it will not be a pure-play digital transaction where one book and get the car delivered to home. Most of India will be O-to-O (online-to-offline), a blend of the digital and offline marketplace," Jain told Insider.<div type="image" title="A used car lot in India" height="1908" width="2544" msid="90288743" hostid="261"></div><h2>The road ahead</h2>While the demand for pre-owned cars <a href="https://www.ft.com/content/6617dc19-6302-42b6-9c98-94faecb0dd8c">has soared across the world</a>, India is a hugely under-penetrated market. Only <a href="https://www.census2011.co.in/hhassets.php">about 4% of households</a> in the country own a car.Globally, China leads the used-car market with 21.4 million units sold in 2019, per <a href="https://redseer.com/newsletters/indias-used-car-market-is-unstoppable-with-its-steady-and-tech-driven-growth/">RedSeer</a>. The US follows in second place with 17.5 million used cars sold in 2019. India is in fifth, with 4.4 million units sold.The country's automotive industry is expected to be worth $300 billion by 2026, per an <a href="https://www.ibef.org/industry/automobiles-presentation">estimate</a> from government-backed think tank India Brand Equity Foundation. The business of pre-owned vehicles stands to play a key role in this growth. From the 4.4 million used cars purchased in 2021, numbers are expected to almost double in five years, per <a href="https://redseer.com/newsletters/indias-used-car-market-is-unstoppable-with-its-steady-and-tech-driven-growth/">RedSeer's forecast</a>.For now, India's used-car unicorns are aggressively adding more manpower and markets to capitalize on opportunities. Droom and CarDekho are eyeing a public listing in the coming months."If we look at the large economies like the US, Western Europe or Japan, we're talking about 70%+ adoption of cars," said Droom's Aggarwal. "In India, the motorization adoption is set to grow from 22 cars per 1000 people to 200 cars per 1000 people in three decades."

How millennials and the pandemic are powering India's used-car market, where 4 startups hit unicorn status in one year

<ul><li>5ire, a sustainable <keyword id="6355684" type="General" weightage="20" keywordseo="blockchain" source="Orion">blockchain</keyword> firm in <keyword id="3658" type="General" weightage="80" keywordseo="india" source="Orion">India</keyword> has secured $100 million Series A funding from UK-based conglomerate SRAM &amp; MRAM. </li><li>5ire claims to be the only sustainable blockchain company from India. </li><li>Alphabit, Marshland Capital, Launchpool Labs, Moonrock Capital are among primary private and institutional investors.</li></ul>5ire, a sustainable blockchain network, said that it has raised $100 million in Series A funding, from UK-based SRAM &amp; MRAM group. This round has taken its valuation to $1.5 billion – making it a <keyword id="152045" type="General" weightage="20" keywordseo="unicorn" source="Orion">unicorn</keyword>, a status given to startups that hit $1 billion in valuation. 5ire claims to be the only green blockchain unicorn in India which rewards its validators and creditors for taking sustainable actions. It is based on the Layer 1 blockchain network (BNB Smartchain, Bitcoin, Ethereum) that can approve transactions without the need of a third network. The company was founded in 2021 by Indian-origin entrepreneurs, <keyword id="9449142" type="General" weightage="80" keywordseo="pratik-gauri" source="Orion">Pratik Gauri</keyword> and Prateek Dwivedi, along with web3 financier <keyword id="13177209" type="General" weightage="80" keywordseo="vilma-mattila" source="Orion">Vilma Mattila</keyword>. “We are on a mission to embed sustainability into blockchain and shift the current paradigm from ‘for-profit’ to ‘for-benefit’. Becoming the world’s first and only sustainable unicorn born out of India in just 11 months, is testimony that we are on the right path. We are moving towards the fifth industrial revolution,” said Pratik Gauri, CEO and Founder of 5ire. The funds raised will be used for business expansion and extending 5ire’s footprint across three continents including Asia, North America and Europe, with India as the hub of operations. It will also hire the best talent in the industry across functions like product, engineering, marketing etc. Indian <a href="https://www.businessinsider.in/business/startups/news/may-is-the-first-month-of-2022-when-startups-raises-less-than-2-billion/articleshow/92432430.cms">VC funding has slowed down i</a>n the last few months and added to that, cryptocrash too has made investors nervous. However, neither of these trends affected 5ire. “We have great confidence in moving forward with investments in sustainable technologies. As a scientist, I have always believed in finding better ways to do things, and 5ire is committed to finding solutions for the 17 UN Sustainable Development Goals,” said Dr Sailesh <keyword id="14442932" type="General" weightage="80" keywordseo="lachu-hiranandani" source="Orion">Lachu Hiranandani</keyword>, chairman of SRAM &amp; MRAM. 5ire has earlier raised funds from Alphabit, Marshland Capital, Launchpool Labs, Moonrock Capital alongside others. SEE ALSO : <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/why-rbi-wants-international-trade-settlement-in-rupees/articleshow/92850515.cms">Explained: International trade settlement in Rupees and why RBI is doing it</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/the-gilded-age-could-be-ending-as-yellow-metals-losing-its-safe-haven-appeal/articleshow/92841178.cms">The Gilded Age could be ending as yellow metal's losing its safe haven appeal</a>

Indian ‘green’ blockchain startup raises $100 million, turns unicorn in a crypto bear market

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Almost one in five of India’s future unicorns drop off the race as funding winter bites

Katya Naidu

How millennials and the pandemic are powering India's used-car market, where 4 startups hit unicorn status in one year

Vasudevan Sridharan

Indian ‘green’ blockchain startup raises $100 million, turns unicorn in a crypto bear market

Eetika Kapoor

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