Auto finance company OTO Capital on Tuesday said it has raised USD 6 million (about Rs 43 crore) in Series A funding round.

The investment round was led by Matrix Partners India and participated by both the existing and new investors, the Bengaluru-based startup said in a release.

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Besides Matrix Partners, the other investors include Prime Venture Partners, 9Unicorns and Better Capital and marquee angel investors like, Asish Mohapatra of Of Business, Ramakant Sharma of Livspace, Kunal Shah, K Ganesh, Ashneer and Suhail of BharatPe, the startup said.

Founded in 2006, Matrix Partners India with approximately USD 1-billion under management, invests in companies in the domestic consumer and enterprise market at the seed, early and early growth stages.

OTO is currently present in five cities – Chennai, Bengaluru, Pune, Hyderabad, and Mysore.

It will use this funding to scale its user base and becoming the default app for two-wheeler buying and financing in the country, it said.

With this investment, the company plans to launch its financing-cum-commerce platform in 15 new cities, including Delhi, Nashik, Indore and Vijaywada, it said.

It also said OTO will double its team size by March 2022 and plans to hire aggressively across verticals, especially technology, product, marketing and operations to drive growth.

“We are re-imagining the two-wheeler buying and ownership experience for millions of Indians. Customers can research, schedule test drives at home, avail innovative and flexible financing options, and complete the purchase journey via our OTO platform,” said Sumit Chhazed, Co-founder, OTO Capital.

With electric two-wheelers added to the mix, OTO aims to become the default app for Indian buyers to cut through the noise, he added.

Founded in 2018 by IIT-Mumbai alumnus Chhazed and Harsh Saruparia, OTO operates on a simple financing model for two-wheelers, where the buyer pays an upfront amount like any other loan but gets up to 30 per cent lower EMIs with an option to retain, return or upgrade at the end of the tenure.

The platform works in partnership with various banks and NBFCs to provide the most hassle-free financing options to its customers. It also provides full auto lifecycle management, from credit underwriting to insurance, maintenance, and eventual resale of the vehicle.

“In the world’s largest 2-wheeler market (India), the consumer’s preference is changing – buying online, stretching their budget for quality and upgrading faster. OTO caters to this new consumer with a new model of buying, financing and ownership. We are excited about the journey ahead for OTO,” Vikram Vaidyanathan, Managing Director, Matrix India, said.

The company said that despite the COVID-19 pandemic, it has grown 4x in the last 12 months while maintaining less than one per cent NPAs.

More than 30 per cent of the company’s transactions were sourced and completed digitally. OTO’s robust growth and collection performance garnered strong interest post-pandemic from various banks and NBFC’s and got it multiple lending partners with the commitment of lending over Rs 250 crore on the OTO platform for the next 12 months, it added.

OTO said it has also established partnerships with all major brands such as Hero Motocorp, Honda, Suzuki, Hero Electric, and more through their dealerships.

“We’re delighted to welcome Matrix Partners, BetterCapital and some angels/entrepreneurs to join us in this exciting journey to transform this industry of over 20 million new vehicles, particularly as it transitions to connected EVs in the near future,” Sanjay Swamy, managing partner, Prime Venture Partners, said.