Silvertree Internet Holdings, a South Africa based business incubator, has acquired a significant stake in CarZar, an online auto-trader in South Africa.  

Financial details of the deal were not disclosed.

Commenting on the deal, Paul Cook, Founding Partner at Silvertree Internet Holdings, said that CarZar has “great team”, adding that the firm is operating in a “large market with great model that is disruptive and economically very attractive”.

Founded in 2016 by Fernando Pinheiro and Michael Muller, CarZar is a stats-based auto-trader that uses national data and their own algorithm, to offer consumers a convenient way to sell their vehicle.

The startup offers an online-only model, a 30-minute sales service and data-based pricing.

The price of a new car compared to a second-hand vehicle is continually widening, according to Pinheiro.

“These influences combined mean that the prestige of owning an expensive car is slowly being replaced by a more utilitarian attitude towards cars,” he said.

 “The auto-trade market as we know it today will look fundamentally different in the next five to ten years, in our view. The demand for second-hand cars is, therefore, on the rise,” he added.

Silvertree Internet Holdings conceives, launches, supports and invests in startups targeting the South African and Sub-Saharan African markets.

According to Cook, Silvertree Internet Holdings invests from balance sheet directly and has a “range of shareholders, individual and institutional, from Europe, the USA and South Africa”.

Silvertree’s focus industries are online/mobile with clear revenue model; B2C e-commerce; and B2B2C sales.

The firm likes business models that are simple or proven, with clear revenue streams, that take advantage of the mobile and Internet future, and that target growing markets and industries.

Cook told Africa Global Funds that the firm’s typical ticket size “varies widely”.

“We've done anywhere between R500k and close to R20m,” he said.

The firm’s portfolio include CyberCellar, South Africa’s second oldest surviving e-commerce store specialising in the sale of premium wines, beers, liqueurs, and wine accessories; PriceCheck, Africa’s largest product and financial services platform; KER & DOWNEY AFRICA, a luxury African safari and travel company; and Sprout, an online performance marketing and advertising solutions provider - to name a few.

Overall, there are around 15 companies in the portfolio, “depending on how exactly you count bolt-ons,” said Cook.

Commenting on opportunities in Sub-Saharan Africa, Cook said: “South Africa is most promising in short term, especially as consumers are under pressure elsewhere. Long term Nigeria is obviously huge opportunity, and behind that markets like Kenya, Tanzania, Ghana, Cote d'Ivoire, etc.”