Carmoola: Why VF Invested

The automotive sector has always been an exciting one for VF, especially in B2C, where the market has lagged far behind in innovation until the last decade. Whether it’s companies such as FlexCar or Finn.auto making it simple to flexibly lease a brand new car or used car marketplaces such as Spotawheel or Cazoo giving consumers confidence that their used car isn’t a “banger”.

A core part of the journey still remained frustratingly difficult and high-friction, securing finance. In a world where neobanks are onboarding new customers in 10 minutes, with full compliance, and credit checks can be completed fully digitally, car finance providers still ask for physical proof of address. Not only is there high friction for the consumer, but the same companies have huge back office teams manually entering data and relying on paper printouts to service their loan books. As a result, their margins are terrible.

When Aidan (CEO) and Amy (Director of Product & Marketing) at Carmoola showed us the alpha version of their product, we were amazed that they had been able to distill the lending journey into 10 minutes. Instead of having to spend hours at a dealership or bouncing around online brokers, their customers would be tapping their virtual Carmoola card with Apple Pay or checking out instantly online.

Not only was the consumer experience top-tier, but a custom-built loan management system would enable them to approve and service the loans semi-autonomously. This was enabled by an excellent tech team in Ukraine led by cofounders Roman and Igor, who are fortunately working safely from Warsaw during the current crisis.

The Carmoola team was also battle-hardened after their experience as founders at Movebubble, a value proposition which wasn’t particularly strong in the UK market, but the team had managed to push the model much further and more efficiently than competitors before exiting the business in 2020.

At VentureFriends we love founders who have grit and are product-centric, but also those that develop deep expertise in their space. The team were outsiders to consumer lending, but Aidan brought in experienced directors who did have that knowledge, as well as quickly becoming an expert himself. This combination gave us the confidence to lead a Seed round pre-launch, which is earlier than our usual sweet spot.

€24B in used car loans are written each year in the UK with another €220B across Europe, Carmoola’s approach of seamless consumer experience has the potential to rapidly build an automotive financing champion.

Carmoola are actively hiring to support their speedy growth, check out their open roles here