As of July 13, 2021, Carsome becomes the first Malaysia-based tech unicorn after acquiring 19.9% of Australia-listed iCar Asia Ltd (iCar) from Catcha Group.
Disclaimer: As Grab (then MyTeksi) was founded in Malaysia, there has been some discussion around whether the title of “first Malaysian unicorn” actually belongs to Grab, which is now headquartered in Singapore. However, the purpose of this piece is not to debate on who the title belongs to, but rather to look back on Carsome’s achievements.
Carsome will then offer to buy the remaining 80.1% in iCar from existing shareholders, a total transaction estimated to be valued over US$200 million.
In exchange, Catcha Group will become a shareholder in Carsome, bringing the startup’s valuation to more than US$1 billion.
Over its 6 years of operating, Vulcan Post has documented key parts of Carsome’s journey since 2015. This latest development marks another notch on the Malaysian startup’s belt, and we thought it appropriate to take a look back at how its journey has unfolded.
2015: Nearing 200 transactions within 4 months of launch
Carsome was launched in February 2015 with the aim of becoming a one-stop place for discovering and comparing the best prices for different cars from various dealers.
It worked closely with dealers to ensure that its users would exclusively be able to enjoy the benefits, and its efforts paid off.
Within 4 months of its inception, it had already helped users save an accumulative total of RM500,000 from all transactions. At the time, co-founders Eric Cheng and Jiun Ee shared that Carsome users were able to save up to RM3,000 off the retail price per car.
In its first round of funding in August 2015, it raised US$350,000 from 500 Startups and IdeaRiverRun (IRR), and announced that it had already formed partnerships with 100 dealerships in the Klang Valley, Johor, and Penang.
2016: Tackling the underserved used car market segment
But it didn’t take long before Carsome set its sights on a segment that required more help. At just over a year old, Carsome then pivoted and entered the used car market.
Its core business was now providing customers a hassle-free experience when it came to selling their pre-loved cars to dealers nationwide. This was done through a transparent bidding system.
Eric told Vulcan Post in 2016, “The introduction of our proprietary pricing data based on real transactions was the key to the company’s growth. Used cars prices vary widely, and the market value for used cars was difficult to assess.”
To overcome that, the site introduced an online valuation service for cars and provided 162-points car inspections, which it claimed it was the first and only one to do so at the time.
Through those services, users could put up their pre-loved cars on its bidding system. From there, over 200 dealers across Malaysia would determine the best price for the car.
Since the start of 2016, Eric shared that they had experienced exponential growth in revenue, and had a compounded monthly growth rate of 62%.
Dictionary Time: Compounded monthly growth rate (CMGR) is the average month-over-month growth over a longer-term duration, typically 6-18 months. A 20% CMGR is already considered exponential.
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They were also serving an average of 200K users who bought and sold cars on the site, and had passed the mark of 1,000 cars transacted annually. By now, Carsome Singapore had commenced operations too.
Carsome’s growth was further supported by a US$2 million Series A in a round led by IRR, with participation from IMG Investment Partners and 500 Startups.
2017: Bringing in US$30 million in annual gross revenue
In June 2017, Carsome raised funding of US$6 million in a Series A2 round led by Gobi Partners. Its monthly revenue had increased by 12.5 times since its previous funding round in 2016.
Meanwhile, its annualised gross revenue stood at US$30 million. By now, it also had a multi-regional presence in 4 markets: Malaysia, Singapore, Thailand, and Indonesia. In total, they were working with over 500 dealers.
2018: US$19 million Series B funding and hints of a future IPO
March 2018 saw Carsome announcing a Series B funding that raised US$19 million from a mix of global investors based in Europe, China, USA, Japan, and Singapore.
The round was led by Burda Principal Investments, with participation by Gobi Partners, InnoVen Capital, and Lumia Capital.
Following the round of funding, Eric had hinted at the possibility of an IPO within the next 3-5 years, but concluded that they would focus on growing the company first.
Carsome also said it would be introducing new product verticals such as financing and warranties to benefit car dealers and customers alike.
In a Series B2 funding round later, it raised US$8 million. By the end of the year, it had passed the mark of 10,000 cars transacted annually.
2019: Establishing Carsome Capital
Carsome established Carsome Capital in 2019, which provides advice and solutions in sourcing and applying for financing, insurance, and other related services for the buying and selling of motor vehicles.
In the same year, it announced a partnership with Funding Societies Malaysia, the largest P2P financing platform in SEA. Together, they offered dealer financing, which aided local car dealers in the purchase of used motor vehicles.
Through the collaboration, an estimated 1,600 car dealers would have benefitted from a total financing amount of US$200 million.
Late 2019 saw it raise a US$50 million Series C round which comprised a combination of equity and debt investments from new and existing investors. At this time, they passed the mark of 40,000 cars transacted annually.
2020: Launching its B2C segment with a flagship store
With CIMB Bank, Carsome co-developed an inventory financing solution for used car dealers, meant to reduce processing time and minimise physical documentation via the site.
In May 2020, Carsome also launched its RM55.5 million Dealer Alliance Support Program. This initiative provided short-term boosts in the forms of bonus rewards and credit lines to help used car dealers rebuild their businesses and finances after MCO.
A little later in August 2020, the startup officially launched its B2C segment in conjunction with the opening of its flagship store, the Carsome Experience Center in KL.
This is where users could test drive the used cars they found an interest in via the site, after making a booking online. If users found themselves satisfied with their pick, they could then make a purchase with Carsome handling financing, ownership transfer, and even loan applications as needed.
In November 2020, Carsome obtained its 100,000th used car seller, and one month later, announced it had raised a US$30 million Series D round.
2021: Founding Carsome Academy to secure youths’ futures
January 2021 was when Carsome officially announced it had set up its first technical institution in Malaysia, Carsome Academy.
It aims to offer Malaysian youths technical education and guaranteed career opportunities. The institution is a Sistem Latihan Dual Nasional (SLDN) training centre accredited by the Department of Skills Development under the Ministry of Human Resources.
Students will undergo 30% of theoretical lessons at the academy before doing 70% industrial training (1,840 hours) at any Carsome Inspection Centers in Malaysia. Following graduation, the student is also guaranteed a job in Carsome.
The one-year course costs RM8,000 and is fully refundable upon a graduate’s successful placement and tenure with Carsome. Study loans are also available for students who wish to further their studies there.
7 months into 2021, Carsome has made another leap with its acquisition of iCar, bringing it to unicorn status. The combined entity will now tackle the US$55 billion digital automotive space in SEA, as Catcha Group CEO Patrick Grove shared.
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From Carsome’s journey, it’s clear that the startup’s growth can be attributed to its team’s focus on finding and solving common pain points in the used car segment.
They were quick to identify an underserved segment and continuously offer solutions at various levels, enhancing their overall perceived value.
Now, the move to acquire iCar Asia cements Carsome as a player to be contended with in the industry that’s already filled with others like Belimobilgue, Cardekho, Carmudi, and of course, popular rival Carro too, to name a few.
Carro had officially achieved unicorn status just a month ago after a US$360 million Series C round. Now, as second-hand motor vehicle e-commerce transactions ramp up in the region, Carsome finds itself still locked in an intense race with Carro for market domination.
Meanwhile, Carousell is also creeping up with its site’s automotive vertical. However, Carsome remains unperturbed by the competition and is targeting US$1 billion in revenue for 2021 following the acquisition.
Of the acquisition, Eric concluded, “This is the first step toward consolidation to form the largest digital automotive group in terms of revenue, user base, largest live listing, and the best end-to-end fulfilment capability in the region.”
Featured Image Credit: Eric Cheng and Jiun Ee, co-founders of Carsome
