Online car seller Cazoo raises £100m despite virus turmoil

Sunday 22nd March 2020 21:15 GMT

Sky News has learnt that Cazoo, which was set up by the LoveFilm and Zoopla founder Alex Chesterman, has secured the new funding from an assortment of existing and new backers.

The equity-raise, which will take the total sum invested in Cazoo since Mr Chesterman came up with the idea for the business in 2018 to £180m, will be announced on Monday.

Tech sector sources said on Sunday that the amount being raised by the company was "staggering" against a backdrop which has seen funds fleeing new investments as they seeks to digest the implications of the coronavirus pandemic.

The £180m figure is said to be a record for any British start-up during its first year of trading.

DMG Ventures, the venture arm of the Daily Mail's parent company, led the latest round, which is said to have been secured at a substantial premium to earlier valuations.

Other backers include Mubadala Ventures, an arm of one of Abu Dhabi's sovereign wealth funds, and General Catalyst, a shareholder in Airbnb and Deliveroo, according to insiders.

Cazoo wants to transform the market for buying secondhand cars from a laborious and often unreliable process into one where purchases can be completed in as little as 72 hours.

In the brief period since its launch, the company says it has sold several thousand cars, generating more than £20m in revenue.

Cazoo argues that it enjoys several advantages over traditional secondhand car dealers because of its deployment of technology in helping consumers choose and finance their vehicles.

The start-up acquires and fully reconditions its cars before offering them for sale.

It delivers them to customers with a seven-day money-back guarantee as well as free comprehensive 90-day warranty and roadside assistance.

Cazoo also supplies instant offers for any part-exchange.

The company raised two earlier rounds of funding, the latest of which was a £50m capital injection late last year.

One investor said that the disruption to consumer spending and the possible advent of a global recession had not proved a deterrent to potential investors in Cazoo.

They added that on a relative basis, the business had become more attractive because of the prospective shift of consumers to digital channels once the pandemic abates.

Mr Chesterman came up with the idea for Cazoo soon after leaving Zoopla, which he sold in a deal worth more than £2bn to the tech-focused buyout firm Silver Lake in 2018.

"Used cars are one of the last remaining consumer markets yet to benefit from any digital transformation," the entrepreneur said last December.

"Cazoo makes used car buying simple and convenient like buying any other product online today.

"We take away the need to travel, to haggle, to spend countless hours at a dealership and to risk any buyer's remorse."

Mr Chesterman previously founded LoveFilm, which he sold to Amazon for £200m, before setting up the online property portal Zoopla.

A Cazoo spokesman declined to comment on Sunday night.

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