Vehicle financing startup OTO has raised $6 Mn in a Series A round led by Matrix Partners India. In addition, existing and new investors such as Prime Venture Partners, 9Unicorns, and Better Capital and marquee angel investors like Asish Mohapatra of OfBusiness, Ramakant Sharma of Livspace, Kunal Shah, K Ganesh, and Ashneer Grover & Suhail Sameer of BharatPe participated in the round.
OTO, which is currently available in five cities, will use the new capital to launch its financing-cum-commerce platform in 15 new cities, including Delhi, Nashik, Indore and Vijayawada. The startup will also use a part of the funds to scale its user base and reach the target of 20 Mn users on its platform.
In addition, it plans to double its team size by March 2022 and hire aggressively across verticals, especially technology, product, marketing, and operations.
Founded in 2018 by Sumit Chhazed and Harsh Saruparia, OTO offers a leasing-like financing model for two-wheeler purchases. It lets buyers pay a similar upfront payment like any other loan, pay up to 30% lower EMIs and have the option to own the two-wheeler at the end of the tenure or sell it back to OTO.
The startup works in partnership with various banks and NBFCs to provide hassle-free financing options to its customers.
India’s two-wheeler financing market, valued at $6.7 Bn in 2019, is expected to grow into a $12 Bn market by 2025 and is saturated with some prominent players.
Besides competition from banks, such as HDFC and SBI, who take up a major chunk of the two-wheeler financing space, OTO is in a race for market space with other players, including Bajaj Auto (Bajaj Finance) and TVS Motor Company.
The startup, however, seems to be on a steady path of growth. It claims to have registered over 4x growth last year, while maintaining less than 1% NPAs. In addition, more than 30% of its transactions were sourced and completed digitally.
OTO also claims that its collection performance has garnered interest from various banks and NBFCs and now has multiple lending partners committed to lending over INR 250 Cr on its platform for the next 12 months.
To establish successful partnerships and drive growth through dealerships, OTO has partnered with major brands, including Hero Motocorp, Honda, Suzuki and Hero Electric.
Chhazed said, “We are re-imagining the two-wheeler buying and ownership experience for millions of Indians. Customers can research, schedule test drives at home, avail innovative & flexible financing options, and complete the purchase journey via our platform. With electric two-wheelers added to the mix, OTO aims to become the default app for Indian buyers to cut through the noise and get a two-wheeler buying experience that has never existed before.”