Mistakes of its well-funded rivals taught this startup to pivot and steal a march

The Spinny core team. Photo credit: Spinny.

The used cars market in India is pegged at around US$125 billion. That could be a conservative estimate given the huge number of fresh car sales clocked in the country: 2.1 million new cars were sold in the last financial year alone (between April 2016 and March 2017). Little wonder, therefore, that there are some big fish swimming in the pool.

CarTrade, for one. Last year, the online auto classifieds company raised US$145 million in funding from Singapore-based Temasek and global investment firm March Capital. It had acquired rival CarWale from German firm Axel Springer for around US$100 million in 2015. Then there is CarDekho, which has raised investment of around US$90 million so far from investors, including Google Capital, Sequoia Capital, Hillhouse Capital, and Tybourne Capital. Another startup, Droom, bagged around US$43 million to expand out of its home turf to Southeast Asia. Swimming with these is young Spinny, which today announced its seed round of funding – about US$1 million.

We wanted to be 200 percent sure that our business is addressing the right pain-point.

You might be tempted to call it audacious, but Spinny says it has learnt from the mistakes of its well-funded rivals, course-corrected, and fixed its business model before gunning for scale. That’s why Blume Ventures, Indian Angel Network, and FreeCharge founders Kunal Shah and Sandeep Tandon are betting on this startup in Gurgaon near Delhi.

The startup’s founders are seasoned players: Niraj Singh, a founding partner with Outbox Ventures; former Flipkart executives Ganesh Pawar and Mohit Gupta; and ex-Adobe man Ramanshu Mahaur. It began operations in June 2015 but took its time to raise its first round of external capital. Why?

“We wanted to be 200 percent sure that our business is addressing the right pain-point. And that it is creating value for the customer, is sustainable, and has a way to scale. So we focused on the business model and the product till now. Now that we are confident of having achieved those, we have decided to focus on the scale,” co-founder and CEO Niraj Singh tells me.

The matter of trust

Photo credit: Spinny.

If there’s one issue that’s been plaguing the used cars space in India – both offline and online – it’s the lack of trust. Unlike in more developed markets, there is hardly any credible paper trail on the quality of the vehicle or its usage in India, so a potential buyer is skeptical twice over.

Used car salesmen are notorious for pulling fast ones on buyers and so, there is a need to look under the hood for defects. Last month, CarTrade acquired Adroit Inspection for its 300 field inspectors spread across the country and its tie-ups with banks and insurance firms to tackle mistrust.

See: A leading used car marketplace tackles the problem of trust with an acquisition

Spinny want to keep the inspection in-house and has a team of experts who will inspect a car twice on about 200 factors before onboarding it to its platform. “If the car does not meet our quality checks, we will just connect the seller to our partner dealers and help him sell it through them. We won’t onboard it on Spinny for buyers,” Singh says.

He explains that while buying a used car, there are two major concerns:

A timely pivot

Full-stack, inventory-holding model