Car Finance Platform Driva doubles down with $6m growth round
Driva, an Australian Fintech platform that helps customers finance and insure their vehicle purchases, has banked another A$6M growth funding round led by Carthona Capital.
Driva, who launched at the start of 2020 and raised $3m in seed funding in April 2021, said persistent revenue growth of 20% a month created momentum with partners and investors that caused them to raise earlier than they had planned.
“We hadn’t planned to kick off the fundraising process until mid-2022, but after seeing strong momentum all year, our investors encouraged us to capitalise on our traction and act as aggressively as possible – and they offered up the capital internally to support this aggression” said Driva Co-Founder, Scott Montarello.
The business hit its stride in its second year of operation, launching partnerships with a number of the dominant industry players including CARS24 and Carsales.
“We learnt very quickly that Driva’s core product, which allows customers to get matched with fully personalised offers from 30 different lenders, was something that a lot of large industry players had started to think about but weren’t in a position to build themselves” said Will Brown, the other Driva Co-Founder who leads Driva’s product and growth efforts.
“We made a decision early on to invest in what we call our partner product, which allows third parties to leverage the Driva platform to offer the same seamless experience you get on the Driva site to their own customers”.
The founders, ex-McKinsey and ex-Goldman Sachs, say they focused on acquiring customers in the most cost-effective way possible in their first two years and found the partnership model to have very attractive unit economics.
But they say they’ve started to shift their mindset in their pursuit of making Driva a household name.
“In our first two years we had no interest in pursuing channels that didn’t show a clear path to profitability, which we felt was unusual for a D2C startup of our vintage” said Mr Brown.
“But as we mature, and our ambitions get more lofty, we know we’re going to have to go big to make Driva the household name that it should be”.
The internal funding round, which came entirely from existing investors, will be used to scale the team from 50 to 100 and invest in the Driva brand.
Some of the funding will also be allocated to ancillary products like trade-ins, and starting to list vehicles for sale in the Driva platform. But the founders say they will remain laser focused on their finance offering in the short-term.
“Right now we’re super focused on scaling our existing offering – so a lot of our product development is focused on automation and products for our internal users. We believe our
platform is already market leading in the level of automation we have in what we internally call “Driva AI”- which powers our lender matching system and enables us to provide a rapid approval process for customers across our full panel of lenders with limited need for human intervention” said Mr Montarello.
“However there’s still a long automation roadmap for us to execute on to continue to deliver the exceptional customer experience at much larger scale, and we feel it’s what’s critical for our success in the next 12 months” said Mr Montarello.
The funding comes as a string of investment into the automotive and fintech startups have gripped the Australian market, with the likes of CARS24 and Carma, who offer a fully online car buying experience both raising very large funding rounds in late 2021.
“There’s a very large change happening in the way customers buy cars and access credit, and Driva is perfectly positioned at the intersection of both of these verticals to benefit from this shift”, said Carthona Partner and Driva Board Member James Synge.
“We’ve seen first hand the incredible progress the team at Driva have been able to make in a very short time with relatively modest funding – so we’ve been encouraging them to think big and go hard in what is a rapidly evolving sector”.
The round included a follow-on investment from the Invictus, which is Chaired by ex-Seven West CEO and Octet Chairman Peter Gammell. The Angel investors who participated in Driva’s seed round also followed on, including Stephen Dash, who made his fortune from creating the online loan marketplace Credible, and Nicolas Scudamore-Smith, who co-founded online automotive spare parts marketplace Sparesbox, which was acquired by Repco owner GPC Asia Pacific.