Malaysia’s Carsome has raised one of the country’s largest-ever series B rounds, securing US$19 million to strengthen its position in Southeast Asia’s ultra-competitive market for used auto market.
Burda Principal Investments – the VC arm of German media company Hubert Burda Media – led the round. Existing Carsome investors Gobi Partners, InnoVen Capital, and Lumia Capital followed on.
This follows a US$6 million Gobi-led investment in June last year, and a US$2 million series A round in March 2016 backed by 500 Startups, Malaysian private equity firm IdeaRiverRun, and Japan’s IMJ Investment Partners.
Carsome co-founder and CEO Eric Cheng told Tech in Asia that the new funds would be deployed to hire new talent and expand regionally, with a particular focus on Indonesia and Thailand.
Tech in Asia data suggests this is Malaysia’s second-largest series B fundraise to date, behind the US$45 million raised by content streaming service iFlix in March 2016.
Launched in February 2015, Carsome started as a price comparison site for new cars. Following an injection of US$350,000 in seed funding the following August, the Kuala Lumpur-based startup shifted direction to tap demand from buyers and sellers of second-hand vehicles.
It established a “consumer-to-business” (C2B) platform that allows car owners to sell their vehicles to dealers online, with the possibility of getting the whole process – including legal transfer of ownership and payment – completed within one day.
Vendors can use the platform to check car valuation data, allowing them to set a realistic price and get the best deal they can. Dealers then make offers on listed vehicles through a bidding system.
Carsome also has its own team of vehicle inspectors that appraise second-hand cars before they are advertised on its platform.
Users and investors alike appear to have responded positively to Carosme’s approach to trading used vehicles.
The startup said in a press release that its monthly total transaction value has increased more than fourfold since the start of 2017, with total car sales through its platform quadrupling over the same period.
It claims to be the market leader in Malaysia, and the regional leader in terms of total transaction volume.
“We are on track to hit break-even point by early 2019,” Cheng said when asked about the startup’s route to profitability.
Its C2B model helps set Carsome apart from a crowd of competitors that includes C2C sites such as Caramo and Carro, as well as B2C portals that link dealers with prospective buyers, such as Carousell Motors, and various online auction houses.
Cheng said his company is the only one in the space providing a one-stop shop covering valuation, inspection, ownership transfer, and payment.
“This puts Carsome in control of the selling process and earns us an unfair advantage versus our competitors. In short, Carsome enables car sellers access to dealers nationwide and provide an easy way to sell, as we take care of the transaction,” he said.
Over 70 percent of transactions done through Carsome involve parties in different towns or cities, indicating its appeal to buyers and sellers whose opportunities are likely to be more limited by C2C classifieds sites where they’d typically have to handle things like payment and inspection themselves.
In January, used-car marketplace BeliMobilGue – a Jakarta-based joint venture of Indonesian VC firm Intudo Ventures and Germany’s Frontier Car Group – secured US$3.7 million in a pre-series A fundraise led by Intudo. It plans to expand country-wide and into neighboring markets.
In the same month, Carmudi – a global group of automotive classifieds ads sites launched by Rocket Internet – raised US$10 million to grow its listings and enhance its technology offering. The round was co-led by HV Holtzbrinck Ventures, Tengelmann Ventures, and Rocket’s regional venture builder, Asia Pacific Internet Group (APACIG).
The Carmudi brand is present in several Asia-Pacific countries, but has fared worse in some compared to others. Last November it emerged that Rocket sold Carmudi’s Vietnam business to Swedish venture builder Fram in a US$50,000 cash-only deal.
Fram said that Carmudi Vietnam made US$169,000 in revenue with a loss of US$518,000 in FY 2016, but told Tech in Asia at the time that it aimed to operate the business at around a quarter of previous running costs, “without much, or any, negative impact on the revenues.”
Tech in Asia will update this developing story throughout the day.
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