Checkars lands US$1.3 million led by Jaguar Ventures

Contxto – Folks, the mobility and marketplace spree isn’t slowing down any time soon. Following SoftBank’s US$70 million investment in Volanty, another smaller yet very ambitious player is surging in Argentina. Without any further ado, Checkars from Buenos Aires recently raised US$1.3 million in seed capital led by Jaguar Ventures. 

Angel investors also joined the round. These included Luis Ureta Sáenz former CEO of Peugeot, Matias Rechia from IguanaFix and Alejandro Ayestaran from Shift.com.

The digitization of the car market

Former OLX car leaders, Jaime Macaya and Juan Cruz de la Rúa, launched Checkars last year. As of today, the team has grown to 20 people, 17 based in Buenos Aires and three working remotely from India.

According to LAVCA, CEO Jaime Macaya’s goal is to make buying and selling used cars a hassle-free digital experience in Latin America. 

While currently focusing on strengthening and consolidating in Buenos Aires, the startup certainly doesn’t discard the idea of expanding to neighboring Chile. In fact, it plans to land in Santiago next year. 

“Chile is a super attractive market,” said the founders. “They have fewer taxes and more credit.”

New capital, new goals

The capital injection will go towards buying cars from third parties, further developing tech, as well as enhancing marketing. Jaguar Ventures’ investment will also help Checkars gather 100 cars in stock by the end of the year.

So far, the startup has sold 220 cars, expecting to end 2019 with around 500 sales. This would turn into a US$200 million worth of billing. To accomplish this, the startup’s algorithm analyzes and provides a purchasing price for each car. However, there are human curators and reviewers in charge of defining a final price. 

“We do a revision on 230 different points. We subtract repairs and fixing from that initial value if needed,” said the founders.

Business model

Currently, Checkars also has an inventory of 60 cars, all of which are less than seven years old with under 100,000 km. The delivery process takes around four to five business days. All the while, it takes care of procedures and required legal documentation.

In total, 20 percent of purchases have been digital, meaning customers didn’t see the car beforehand. According to the founders, Checkars wants this number to increase since it makes everything easier and faster.

Users who buy the cars online can access a 10-day trial and one year of mechanical coverage in case of malfunctions. 

The company makes money in three different ways, all of them based on customers selling their cars. One method is to liquidate the car, for which the company takes a 14 percent discount over the total value.

Similarly, buy it within 30 days with a 12 percent commission or through consignment, for which the startup pays the owner their share when the car is sold. This way, it takes a 7 percent commission out of the deal.

Asset vs. asset-less

Interestingly enough, the “asset-less” business model has been growing in popularity over the past couple of years. Platforms such as Airbnb, Uber and many others were attractive because of the companies’ little Capex investments. Nevertheless, we’re may now seeing a counter-trend, too. 

Now companies are actually starting to own assets, assuming greater risks in the process. For instance, Checkars actually purchases the cars, Brazil’s Loft buys the apartments before rental and Panama’s Selina acquires, transforms and offers spaces to accommodate travelers and nomads.  

-VC