Car matchmaking startup Mogo has raised $1 million from the NewsCorp-backed Scaleup Mediafund, as co-founders Vanya Andropov and Greg Harris put the business in gear to launch in Australia, and beyond.
The Adelaide startup aims to disrupt the online car-buying process, allowing people who have already done their research and selected the vehicle they want to reach out to dealerships in their area.
If a dealership has the wheels the buyer wants, they can respond with their price, paying a little as $7 for the lead.
Just six months ago, Mogo raised $1 million from friends and family, plus several high-net-worth individuals.
Get daily business news.
The latest stories, funding information, and expert advice. Free to sign up.
Since then, the founders have been testing the portal and getting ready to launch on a larger scale.
While Andropov and Harris don’t disclose how many customers have used the platform, they do say the biggest growth indicator for them is the number of dealerships that have signed up.
More than a third of the dealerships in the test area have registered with Mogo, Andropov tells StartupSmart, and that growth is continuing.
“That was quite surprising”, he says.
“There’s a lot of pain out there in the industry.”
Equally, in the trial period, just over 60% of customers who used the platform went on to purchase a car within two weeks, he says.
“There were certainly very qualified leads coming through.”
Over the past six months, the co-founders have been testing Mogo, mainly reaching prospective users through Facebook.
They “spent a little bit of money”, Andropov says, choosing the platform because campaigns can be stopped quickly if need be.
“The cat’s cry in startups at the moment is ‘fail quickly’, as opposed to wasting a lot of money,” he adds.
And, while the trial was largely successful, the team did learn a few things.
As it turns out, Mogo customers are “so far down the track of wanting to buy a car”, they weren’t interested in the chat feature of the platform, Andropov says.
“They just wanted to talk to the dealers straight away.”
In fact, of 3,000 customers the founders surveyed, a massive 92% said they would prefer to have their details shared with the dealers immediately, “so I can start that process of buying”.
While the message the Mogo team were pushing — that this is a platform for those who know what they want — resonated, customers actually wanted to be contacted by the dealers who had it.
And so, while the results surprised them, they changed the function on the app accordingly.
“There are a lot of ad sites out there,” Andropov notes.
“They’re specifically designed to take you from A to Z.”
Mogo, however, only deals with customers towards the end of the alphabet.
“There’s that level of urgency with Mogo customers,” the co-founder says.
“They just want to go and buy that car.”
“We’re well ahead of the game”
The funding from the Scaleup Mediafund will be directed towards scaling the Mogo platform rapidly, particularly through media, PR and an editorial campaign.
Along with NewsCorp, the fund is backed by Nova, Foxtel and Channel Ten.
“With those assets there will be a real emphasis on TV to build the brand,” Andropov says.
The backers will also be able to offer “a lot of editorial support”, he adds.
“Those two things give you an enormous reach.”
And, while the founders are focused on proving the product in the Australian market first, they also have their eyes on international expansion.
Already, they have trademarked Mogo in the US and the EU, Harris tells StartupSmart.
“We have a patent-pending status in the US,” he adds.
“We’re well ahead of the game on that side of things.”
According to Harris, the transparency of Mogo’s system means it could be especially disruptive Stateside, where dealerships selling through platforms are often hit with hidden brokerage costs and charges.
“The industry and the consumer are suffering from that sort of thing,” he says.
Equally, while Australia sees about 3.4 million cars sold each year, in the US, that number is about 58 million. And so, having a patent pending in the US market could have been a factor in the investment, Harris says.
“I don’t think that could be lost on NewsCorp.”
Adapt and grow
Andropov says he has “absolutely” learnt from his experiences founding, testing and raising funds for Mogo.
“That’s the entire journey,” he says.
It may be cliche, but the mantra of failing fast is “just so true in startupland”, he adds.
“Don’t waste money on things that aren’t going to work and don’t kid yourself that they’re going to work.”
Communicating with your customers — and for Mogo that includes both car buyers and dealerships — is everything, Andropov explains.
“If something is not going to work with your customers, don’t keep beating it, just change something and make it work.”
Equally, while Harris points out that Mogo initially used social media to get users on board, he is reluctant to rely on it too heavily.
The problem with just using social media … is that we don’t brand it well enough by just using Facebook,” he says.
“You’ve got exposure, but you haven’t got branding.”
This means that some dealers hearing about the platform for the first time “think it might be a scam”, he adds.
“It’s a good way of testing something … but not the only way to go for the future.”