Inside BeepKart's abrupt departure from used two-wheelers space BeepKart had raised more than USD 18 million in different funding rounds.

BeepKart, a Bengaluru-based marketplace for used two-wheelers, has shut down its operations. The closure follows mass layoffs conducted months earlier, which impacted over 100 employees.

Entrepreneur India has learned that the company explored potential merger and acquisition deals before ultimately deciding to close.

The company's website stated, "As always, BeepKart remains fully committed to supporting our existing customers. If you have any post-sales queries or require assistance as per the terms of engagement, please don't hesitate to reach out."

Founded in 2020 by Hemir Doshi and Abhishek Saraf, BeepKart developed a technology platform to facilitate the buying and selling of used two-wheelers. The company operated in the Bengaluru and Chennai markets, having recently ceased services in Chennai.

BeepKart had secured more than USD 18 million in various funding rounds from investors including Chiratae Ventures, Stellaris Venture Partners, and Vertex Ventures. The company reported a revenue of nearly Rs 100 crore in FY24, as per The Kredible.

According to sources, the company is now seeking to sell its technology stack and is in the process of returning unused capital to its investors. The source added that the founders, investors, and other stakeholders were in agreement to shut down operations after their attempts at M&A deals were unsuccessful.

"The company had scaled quite a bit since its inception in 2020 and was even eyeing profitability but the market realities forced it to shut it down. BeepKart was considered as one of the successful and resilient businesses in the used two-wheelers space," a source told Entrepreneur India.

"While the fundraise had become difficult, the company planned to continue operations only if they could onboard a strategic investor. This evidently did not happen for BeepKart."

On the so-called market realities, the source privy to the developments in the company for a while explained that the used two-wheeler market had become a tough nut to crack.

It's worth noting that even though firms like BeepKart tried to bring some sort of an organisation in the industry but it's largely driven by the unorganised sector, and heavily influences the customer behavior.

According to Ken Research, "The unorganized sector of the India used two-wheeler market contributes up to nearly 99% of the overall market whereas the organized sector contributes only nearly 1% of the revenue. The unorganized sector gains their revenue from commission received from sale of used vehicles and repair and maintenance services."

The used vehicle market, including cars and two-wheelers, is highly competitive. While new-age platforms like Spinny and Cars24 have gained significant ground, they face competition on the two fronts: the vast unorganized sector and the used vehicle divisions of legacy brands. For example, Maruti has True Value, while two-wheeler brands like Royal Enfield and Hero MotoCorp have their own verticals like Reown and Hero Sure, respectively.

For these legacy companies, these used vehicle verticals provide a strategic purpose beyond pure profit. They serve as a catalyst to provide exchange and upgrade offers, helping to drive new vehicle sales.

While BeepKart is the latest to exit the market, there are other heavily funded firms to exit the market. For instance, CredR shut down in mid-2024. The company had raised $42.1 million from marquee investors like Yamaha Motors.

"Used cars or two wheelers remains an attractive proposition. But at the same time it has remained largely unorganized. This is similar to how Ola and Uber continue to operate though the unorganised market hasn't completely disappeared. It's also a stark reminder that the market realities are very different from what the VCs and others would like to see ideally," said a VC at a firm with investments in a two-wheeler startup on the condition of anonymity.

BeepKart's struggle to stay afloat despite scaling to some extent shows the limitations in the used vehicles market. Not that the VCs did not embrace the business model, the industry is yet to become highly organised, like the digital payments.