SoftBank Invests €460 Million in a German Car Startup

Japanese conglomerate SoftBank has agreed to invest €460 million in Auto1, a fast-growing German online car dealer, in one of the biggest funding deals ever for the country’s buoyant start-up scene.

The investment will be made through Vision Fund, a $93 billion technology fund that SoftBank and its founder Masayoshi Son manage and are investors in but is principally backed by the governments of Saudi Arabia and Abu Dhabi.

Auto1 will use the funds to introduce its service that helps private car owners sell their vehicles in new countries, expand a fintech venture that provides car dealerships with loans, and give its software to more auto dealers and even car manufacturers, co-Chief Executive Officer Hakan Koc said in an interview Monday.

"We are delighted to welcome SoftBank Vision Fund, one of the largest tech funds in the world, as an investor in AUTO1 Group. We believe that the Fund’s deep investment and technology expertise will help us to accelerate our growth as we continue to focus on making the used vehicle market more efficient and transparent."

“We’ve developed excellent relations with car manufacturers over the past 12 months,” Koc said by phone. “We’ve succeeded in building pan-European marketplaces and have the software for it, and it’s that kind of expertise these companies can use.”

Founded in Berlin in 2012, Auto1 has sold hundreds of thousands of cars on its platform. Revenues in 2016 came in at €1.5 billion (£1.3 billion). 

Backed by the likes of Goldman Sachs and JP Morgan, Auto1 connects car buyers with car sellers in around 30 countries. 

It will be SoftBank’s first investment in Germany and will confirm the Berlin-based company’s status as the most highly valued private start-up in Europe behind streaming service Spotify. Talks were first revealed by the Financial Times in November.

Also, the German used-car dealing platform said a 460 million euro ($561 million) financial infusion from Japan's Softbank meant it was under no pressure to launch an initial public offering to fund its pan-European growth plans.

That money is of the order that Berlin-based Auto1 might have raised with a stock market flotation, co-founder Hakan Koc told Reuters on Monday. "That's why we aren't considering going to the market for now," he said.

Following its investment, Softbank will own 20 percent of Auto1 while its founders will retain just over 30 percent, ensuring that together they have majority control. With the new funding, Auto1 has raised more than $1 billion in outside financing.

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