Broom, an all-in-one automotive small and medium sized enterprise (SME) solutions startup based in Indonesia, announced Tuesday its $10 million Pre-Series A funding round led by Openspace.
The round also saw participation from MUFG Innovation Partners and BRI Ventures, alongside existing investors AC Ventures and Quona Capital, Broom said in a statement.
Broom’s newly-raised funds will enable the company to diversify its product offerings and further accelerate inventory turnover for both Broom and its dealers.
Additionally, the company aims to double its credit facility from external lenders, building on its previous success in securing a total of $12 million in debt facilities from DBS Indonesia and BRI in 2022.
With a larger credit facility, Broom will be able to serve a greater number of dealers and handle a higher volume of transactions, facilitating the company’s exponential growth.
By applying the latest technology to the sector, Broom also plans to pursue the development of an intelligence model for assessing car quality and more effectively appraise the fair-value of vehicles.
This cutting-edge approach will provide customers with greater transparency and help Broom to further differentiate itself in the market.
“We are grateful for the support from our investors, lenders, and partners that have fueled our growth so far,
“We’re confident that we have found the right recipe to thrive, and we’re excited to see how this new chapter will unfold for us and for our dealers,” said Broom Chief Executive Officer and Co-Founder Pandu Adi Laras.
He also noted investing in top talent in 2022 has accelerated the firm’s efforts to identify the optimal product market fit, as evidenced by its high retention rate.
By implementing a sustainable business model with operational efficiency, he said the firm has established a strong foundation for Broom’s continued success, particularly in the current economic climate.
“With these strategic measures in place, we can now concentrate on delivering a broader range of value-added services to our customers, positioning Broom as a comprehensive all-in-one solution for automotive SMEs,” he added.
Founded in June 2021, Broom aims to empower used-car dealers in Indonesia, many of whom face a lack of access to capital and operate relatively unorganised businesses.
The company’s flagship service, Buyback, provides dealers with short-term working capital through a temporary car sale service with a repurchasing option.
This scheme allows dealers to optimise their inventory, accelerate turnover, and eliminate non-performing loans.
Broom also offers a digital showroom management platform that helps dealers operate their businesses more efficiently.
Additionally, the application enables dealer-to-dealer trading, opening up new avenues for dealers to quickly move their inventory and accelerate turnover.
“We’re excited to partner with Broom on their mission to change the way dealer financing in Indonesia works. By leveraging technology and data analytics, they are unlocking financing to a segment of Indonesian small businesses that were previously overlooked,
“We see a bright future for this company and are proud to be a part of their journey,” said Ian Sikora, Executive Director at Openspace.
According to the statement, the opportunities provided by the used car industry have remained largely untapped.
Whilst Indonesia contributes approximately 30.6 percent of new car sales in ASEAN, the country’s used-car market is even more substantial.
Used car transactions contribute up to 6 times that of new car sales, resulting in a sizable $65 billion industry.
This market is primarily underpinned by the country’s 50,000+ dealerships, which are involved in at least 85 percent of used-car transactions.
Given the size and scope of the existing market as well as the importance of mobility in Indonesia, investors have recognized the future growth potential in the secondary car business, and backed Broom to be one to deliver on it.
Over the past year, Broom has already shown impressive progress.
The company transacted over $300 million worth of inventory through its Buyback scheme and successfully onboarded 5,000+ used car dealers.
Broom’s expansion efforts have also seen it establish 6 branches across Greater Jakarta, Surabaya, and Yogyakarta.
As evidence of its rapid growth, Broom’s Gross Merchandise Value (GMV) has increased 16-fold year-on-year.
“Indonesia’s used car market is huge, but fragmented and unorganised,” said Nobutake Suzuki, President and Chief Executive Officer of MUFG Innovation Partners.
“Broom is taking a novel approach to developing asset-backed lending solutions that are more flexible, lower cost and accessible, helping to empower the small-sized dealers that
dominate used car transactions in Indonesia.
“We’re thrilled to support Pandu and his team, and happy to explore collaborative partnerships,” he added.
DBS Indonesia signs $6M credit facility for Indonesia-based automotive startup Broom