InstaCarro raises $22 million to tackle Brazil’s $50 billion used-car market

InstaCarro, a Brazilian-based marketplace for buying and selling used cars, has raised a whopping $22 million in its first institutional round of venture financing.

One of the largest early-stage investments for a Brazilian startup, the new financing will be used for product development and international expansion, according to InstaCarro’s co-founder and chief executive, Diego Fischer.

A former McKinsey Digital employee, Fischer and his co-founder Luca Cafici first saw the massive opportunity presented by the $50 billion Brazilian used-car market in 2015.

Cafici, who previously worked at the Rocket Internet portfolio company Carmudi, wanted to launch a similar platform in Latin America. After studying different business models, Cafici settled on the one that had won success for Russia’s

“We started analyzing the model and that’s how we decided to build the company,” Cafici said.

Unlike U.S. dealerships like Carvana and others, InstaCarro buys from car owners and sells to used-car dealerships through its online marketplace. Sellers get the advantage of near instantaneous payouts and used-car dealerships get certified, quality controlled stock for their lots.

The model was compelling enough to win the attention of two of the most successful angel investors backing Latin American companies — Fabrice Grinda and José Marin.

Through FJ Labs, InstaCarro managed to net what was one of the largest seed rounds in Brazil, a $3.5 million investment in 2016.

The new round, co-led by FJ Labs and new investor Lumia Capital, was raised over two tranches and gives InstaCarro a nice war chest as it looks to expand its geographic footprint.

Already the company has sold more than 10,000 cars to dealers through its service and the two co-founders think there’s plenty of room to run in a market where $40 billion in car sales is now controlled by used-car dealerships.