Car Showroom Financing Startup Broom Announces IDR 43 Billion of Funding
Car showroom financing startup Broom announced the acquisition of pre-seed funding of $3 million or more than 43 billion Rupiah.
The round was led by AC Ventures, with participation from Quona Capital and several angel investors, including founders Kopi Kenangan and Lummo. The fresh funds will be used to improve products and services, expand presence in major cities, and multiply teams.
Uniquely, Broom positions itself as a digital solution for the mobility ecosystem providing a single platform for automotive SMEs to digitize showroom business processes, such as managing inventory, gaining access to financing, and managing their sales-side tools.
This startup was initiated last year by Pandu Adi Laras (CEO), Pungky Wibawa (CBO), and Andreas Sutanto (CFO). All three have strong experience in the field of mobility. Pandu has been in mobility since 2016, when he worked for Uber, before joining Go-Fleet.
Then, Pungky is an experienced entrepreneur and has good connections in the dealership space, considering Pungky’s status as the owner of one of the largest BMW dealers in Indonesia. The founders’ experience combines a deep understanding of business and clarity on how technology can revolutionize the industry.
In an official statement, Pandu said, Broom has the ambition to be the first choice of used car dealers to develop their business by providing various products and services.
“With the support of leading investors who believe in our vision, this will increase our confidence to continue fighting on our journey to empower used car dealers in Indonesia,” he said, Friday (25/2).
Car dealerships generally work in a very traditional manner, with most stock counting done on the board. When trying to go online, car dealers find it quite difficult to sell on the platform and find the right buyer in their location. Financing is generally quite challenging due to the lack of documentation.
However, car dealers go to loan sharks for 6 week loans because they find it slightly profitable even with the significant interest that these lenders provide (estimated 8% per month). With this condition, Broom aims to provide dealer digitization and financing to empower car dealers.
Broom provides dealers with three solutions through its platform, ranging from operational enhancement, online sales enabler, and access to financing.
Productive financing Broom offers short-term loan facilities with competitive interest rates by partnering with financial institutions that provide low-cost financing.
This allows customers to access loan facilities by utilizing existing inventory as collateral with a fast approval process. As digital solutions penetrate every industry, embedded finance is a huge opportunity.
“The used car industry sees an annual transaction value of $14 billion, and MSME car dealers represent more than 80% with little or no access to affordable financing. Broom is working to empower these dealers with financial and support products to help them grow,” said Adrian Li, Founder & Managing Partner of AC Ventures.
Currently, Broom has more than 2000 used car dealers in the Greater Jakarta area and is optimistic that this will increase because the company has partnerships with large financial institutions such as BRI Finance and BRI Insurance.
Also, more than 4 thousand cars are registered on the Broom marketplace platform and of these cars, IDR 120 billion has been funded.
Automotive Startup Competition Map
Recently, the competitive landscape for automotive startups has narrowed to regional and local levels through the funding they have announced. In the region, there are Carsome and Carro who are competing to dominate the market.
At the start of the year, Carsome announced a $290 million Series E funding that raised its valuation to $1.7 billion. They run a C2B2C business — buying from consumers and selling them to a network of dealers, as well as selling used cars directly to consumers.
And, equipped with O2O experience through experience centers spread across a number of cities. Its closest competitor, Carro has a Series C funding of $360 million with a valuation of more than $1 billion. Carro also has a Carro Automall experience center service.
Apart from that, at the local level there is OLX Autos with its main focus more on buying cars from consumers, although currently some of the inspection products are also starting to be sold through OLX and other online marketplace channels. Then there is Moladin who pocketed Series A funding of $ 42 million led by Sequoia Capital India and Northstar Group.