By Chee Jo-Ey
USED car trading platform Carsome recently raised US$50 mil Series C funding in equity and debt from investors and banks.
Carsome co-founder and CEO Eric Cheng tells FocusM: “Apart from capital injection, we want to create a synergistic effect with our investors. Take, for example, our new investor Mitsubishi UFJ, a renowned banking group which we can leverage on for their services to help us offer financing to our users, expanding our services.”
Homegrown outfit Carsome is Southeast Asia’s largest used car trading platform with 40,000 cars transacted annually, accounting for 1% of the used car market. On average, one car is sold through Carsome’s platform every 10 minutes. Carsome is an integrated platform that caters for the car selling experience from end to end.
“Our most immediate plan is to grow our market share and revenue. Last year, we grew our revenue three times from that of 2018 and this year we want to replicate that same kind of growth. Moving on, we’re also looking into extending our services to help people buy a used car. We are looking to launch that within this year after raising the Series C funding,” adds Cheng.
Carsome announced last year that it had completed the equity closing for the US$50 mil Series C.
The current financing round welcomed new investors including MUFG Innovation Partners (MUIP), corporate venture capital arm and a wholly-owned subsidiary of Mitsubishi UFJ Financial Group, Inc (MUFG), one of the world’s leading financial groups, as well as Daiwa PI Partners, the private equity arm of Daiwa Securities Group, one of Japan’s largest securities groups, Endeavor Catalyst and Ondine Capital.
Carsome’s Series C fundraising also saw participation from existing investors including Gobi Partners and Convergence Ventures.
In Southeast Asia, over 40,000 cars are transacted annually totalling more than US$300 mil in transaction value, excluding all loan and financing deployment.
Funding will be used to help consolidate Carsome’s market leadership in Malaysia, Indonesia and Thailand, with expansion into more Tier 2 and Tier 3 cities in these countries and to accelerate financing product offerings for dealers and consumers with multi-country rollouts over the next 12 months.
Carsome has built a successful track record with loan portfolios over the past year and is ready to scale up the offering by working with strategic partners, including regional banks and non-banking financial institutions.
The company prides itself on being a one-stop solution for car sellers and dealers, from inspection to ownership transfer, promising a hassle-free process with instant payment and seamless paperwork. Customers can schedule a free car valuation at any of its inspection centres across the region.
Carsome’s inspectors will appraise the car and provide an offer on the spot with the help of the proprietary inspector toolsets and pricing model. The car is then put up for bidding to all used car dealers in Carsome’s network.
When a customer accepts an offer, the paperwork will be managed by Carsome, and payment is made to the customer via an online bank transfer instantly as part of the ownership transfer. To date, Carsome has a coverage of more than 6,000 dealers across over 50 cities in Malaysia, Indonesia, Thailand, and Singapore on its platform and over 12,000 monthly inspections at its inspection centres across Southeast Asia.
“We’re trying to build our pricing engine which is one of the most important parts of the equation in the used car industry. It’s hard to identify a fair price or market price for a used car. With so many actual transactions on our platform, we can scale the data to create a model and offer this tool to banking institutions and consumers.
“Aside from that, we hope to create more automation and create a seamless process for our users with a car inspection that takes less time, say 20 minutes compared to the usual inspection that takes 45 minutes,” says Cheng.
“Our biggest challenge as a tech startup is recruiting technical talent. We cater to a very huge auto market and we showed our growth,” he adds.
Carsome has over 700 employees across its Southeast Asia offices. Operationally, it remains highly capital efficient. It is operationally profitable in Malaysia and targets profitability in the remaining markets by end-2020.
As part of the strategic investment, Carsome will collaborate with MUFG and its subsidiaries in Southeast Asia to support Carsome’s vision of driving the automotive industry forward, by providing integrated financing access for dealers and consumers via its platform.
MUFG owns both PT Bank Danamon Indonesia, Tbk, which is one of the largest banks and the leading used automotive financing company in Indonesia, and The Bank of Ayudhya Public Company Limited (Krungsri), Thailand’s fifth-largest bank in terms of loans and deposits.
Through this collaboration, MUFG and its subsidiaries will have the ability to provide business-to-business (B2B) and business-to-consumer (B2C) financing on Carsome’s platform by leveraging Carsome’s transactional data.
In March 2018, the company raised US$19 mil in Series B funding led by Burda Principal Investments, alongside Gobi Partners, Convergence Ventures, Indogen Capital, InnoVen Capital and Lumia Capital.
It then followed with a U$8 mil extension round in August 2018, led by the family office of Joe Hirao, founder of Tokyo-headquartered ZIGExN Co Ltd. — April 17, 2020
