Broom, an Indonesia-based automotive SME tech solutions startup, has announced raising $10 million in pre-Series A funding round led by Openspace Ventures.
The funding round was also backed by MUFG Innovation Partners and BRI Ventures, alongside existing investors AC Ventures and Quona Capital.
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 (despite challenging credit conditions brought about by the economic downturn.)
Founded in June 2021, Broom aims to support 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.
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.
According to Broom CEO & Co-Founder Pandu Adi Laras, the company’s success can be attributed to having invested in talent and made a commitment to maintaining positive unit economics from the outset.
“By implementing a sustainable business model with operational efficiency, we have established a strong foundation for Broom’s continued success, particularly in the current economic climate,” Laras stressed.
To date, the opportunities provided by the used car industry have remained largely untapped. Whilst Indonesia contributes approximately 30.6% of new car sales in ASEAN, the country’s used-car market is even more substantial. Used car transactions contribute up to 6x that of new car sales, resulting in a sizable USD $65 billion industry.
This market is primarily underpinned by the country’s 50,000+ dealerships, which are involved in at least 85% 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.
