Used car market in Indonesia is on a growth path fueled by a number of trendsincreasing digitization of used car sales; greater variety of financial options; and the COVID-19 pandemic, which prompted the idea of private car ownership.
Broom, an Indonesia-based auto financing startup that wants to help used car dealers run more efficiently by applying an asset-based lending model to their businesses by offering in-app trading between dealers and providing new financing for it, said Tuesday. closed a $10 million Series A pre-funding round led by Openspace Ventures.
Other contributors incl MUFG Innovation Partner, BRI Ventures and its previous backers such as AC Venture and Quona Capital also participated in the latest round. (Broom declined to comment on whether he or his investors were affected by the Silicon Valley bank crisis.
The startup was founded when Pandu Adi Laras, Chief Executive Officer (CEO) and co-founder of Broom, wanted to sell his car a few years ago, which he was doing because he needed money to renovate his house. However, the used car dealers that Laras visited told him that they could not afford to buy back Laras’ car due to limited cash and working capital, and instead only offered trades.
“The traditional approach is more like opening mom-and-pop stores, where vendors have to wait for their inventory to sell. [to end customers]and then they can use that money to buy new properties to sell,” Laras said.
The problem was quite common among used car dealers in Indonesia, according to Laras, and that’s how he came up with the idea for Broom.
Co-founder and Chief Financial Officer (CFO) Andreas Sutanto and Laras started Broom in 2021. The following year, it launched its flagship service, Buyback, to help used car dealers in Indonesia, many of whom lack access to capital.
“In retrospect, [car dealers] can optimize their inventory and accelerate turnover, thereby increasing their income; our app allows them to easily manage inflow and outflow and trade with other dealers in our ecosystem,” said Laras.
Buyback provides dealers with “short-term working capital through a temporary car sales service with a buyback option” and dealer-to-dealer trade, making inventory management more efficient. The startup explained that Buyback is “not a loan per se, but more of a temporary sale that involves a change in ownership. Then the dealers can buy back their product at a slightly higher price.”
(left to right) Andreas Sutanto, Co-Founder & CFO; Pandu Adi Laras, Co-Founder and CEO; Claussen Sindhuwinata, COO. Image credits: to sweep
The latest funding, which will bring total equity raised to $13 million, will enable Broom to diversify its product offering and accelerate inventory turnover for Broom and its dealers. The company recently soft-launched its first offline showroom where its dealer partners can showcase their inventory to more end customers. In addition to equity financing, Broom last year secured a $12 million loan from DBS Indonesia and BRI. The startup aims to double its credit facilities from external lenders to handle more deals.
Broom says more than 5,000 used car dealers, its key target customers, now use its platform in Indonesia, contributing to approximately 30.6% of new car sales in Southeast Asia. On average, using its Buyback platform has enabled dealers to triple their inventory, sales and profitability, according to Broom. The company is headquartered in Indonesia, where the used car market is estimated at $65 million and is located expected to reach $70.3 billion by 2027. Broom has the ability to provide its solution to dealers and later direct customers.
Some automotive markets like Carro, I say and OLX Indonesia, cover direct customer trading and financing. Broom has sought to differentiate itself by aiming to empower existing dealers, which number more than 50,000 in Indonesia.
Broom’s technology projects include building an intelligence model to assess vehicle quality.
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“Indonesia’s used car market is huge, but fragmented and unorganized,” said Nobutake Suzuki, president and chief executive officer of MUFG Innovation Partners. “Broom is taking a new approach to developing asset-based lending solutions that are more flexible, lower cost and accessible, helping to empower the small-scale dealers who dominate used car transactions in Indonesia.”