An online car retailer launched just six months ago will this week lay claim to the status of becoming Britain’s fastest-ever technology ‘unicorn’ after raising another £25m from investors.
Sky News has learnt that Cazoo, which was founded by Alex Chesterman, the entrepreneur behind successful start-ups Lovefilm and Zoopla, will announce on Tuesday its latest injection of funding, taking its valuation to more than $1bn.
The new money includes an investment from Draper Esprit, the listed technology company backer, as well as existing shareholders such as DMG Ventures and General Catalyst.
Mr Chesterman’s ability to raise money at inexorably higher valuations for a business operating against a difficult industry backdrop during the coronavirus pandemic underlines Cazoo’s investors’ faith in his long-term vision for the company.
Cazoo, which was recently unveiled as Premier League club Everton’s shirt sponsor for next season, says it is transforming the little-changed method of buying a used car by having it delivered to a customer’s door within as little as 72 hours.
It claims to have become “the country’s leading online car retailer” since its launch, even as the market for new cars has plummeted to sales levels not seen since the immediate aftermath of the Second World War.
The company was established 18 months ago by Mr Chesterman, offering free delivery and a seven-day money-back guarantee.
It owns and reconditions all of the vehicles it sells, and provides financing and part-exchange to buyers.
Cazoo argues that it enjoys several advantages over traditional second-hand car dealers because of its deployment of technology in helping consumers choose and finance their vehicles.
The latest equity-raise takes the total sum invested in Cazoo since Mr Chesterman came up with the idea for the business in 2018 to more than £200m.
Cazoo’s march to unicorn status makes it one of a rarefied group of British tech companies to reach that level.
Others include Deliveroo, Ovo Energy and The Hut Group.
The average time taken to achieve a unicorn valuation is six years, reinforcing the astonishing pace at which Cazoo has reached the milestone.
Its other backers include Mubadala Ventures, an arm of one of Abu Dhabi’s sovereign wealth funds.
The company raised a round of funding as recently as March this year.
Speaking about the previous fundraising, one investor said the disruption to consumer spending and the possible advent of a global recession had not proved a deterrent to potential investors in Cazoo.
They added that on a relative basis, the business had become more attractive because of the prospective shift of consumers to digital channels once the pandemic abates.
Mr Chesterman came up with the idea for Cazoo soon after leaving the property portal Zoopla, which he sold in a deal worth more than £2bn to the tech-focused buyout firm Silver Lake in 2018.
“Used cars are one of the last remaining consumer markets yet to benefit from any digital transformation,” the entrepreneur said last December.
“Cazoo makes used car buying simple and convenient like buying any other product online today.
“We take away the need to travel, to haggle, to spend countless hours at a dealership and to risk any buyer’s remorse.”
A Cazoo spokesman declined to comment on Monday.