Spotawheel, a startup operating in Greece and Poland with a car dealership model quite similar to Carvana in the U.S., has picked up €5 million in new funding. Backing the online used car dealership is VentureFriends, which led the round, with participation from Velocity Partners and unnamed “strategic” investors.
The investment includes both equity and debt financing, since part of Spotawheel’s business includes purchasing used cars upfront. It brings total raised by the Athens-headquartered startup to €8 million since launching in 2016.
“Used cars is one of the largest markets in value worldwide growing at a 5-7% rate annually, operating still primarily offline in a notoriously non-transparent way,” says Charis Arvanitis, Spotawheel co-founder and CEO.
This sees potential buyers fear buying a “lemon,” coupled with over-complicated processes, hidden-fees, and fragmented supply. The latter is largely a combination of private sellers via classified ads, and traditional offline used car dealerships.
“The lack of centralized control on the industry’s hugely fragmented seller structure, has prevented any meaningful innovation over the past 20 years, when the typical online classified ads emerged,” says Arvanitis. “That problem is even more evident in Europe, where car trade flows between countries make it much harder to control quality and trace cars history”.
To address this, Spotawheel offers an online B2C platform for used cars that Arvanitis says has redesigned the buy-sell process from scratch to create a “frictionless” and trusted buying experience. The idea is to bring e-commerce levels of convenience and protection to purchasing a used car.
“Customers can opt in for a test drive or have the car delivered countrywide under a 7-day return policy, while enjoying up to 5 years of limited warranty, the largest in Europe,” he says. This is underpinned by Spotawheel’s “predictive analytics” covering the condition and expected failures on a per car basis.
In addition, Arvanitis explains 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. This includes deploying working capital purchasing vehicles upfront or via a commission-basis agreement.