Southeast Asia’s leading used car platform, Carsome has the honour of being Malaysia’s first tech unicorn
In 2013, venture capitalist Aileen Lee coined the term ‘unicorn’, used to describe privately held startup companies with a value of over US$1 billion. While these companies were rare at the time, more have since emerged, and it has become every aspiring startup founder’s dream to build a unicorn company one day.
While not every startup makes that dream come true, that dream became a reality for Carsome co-founder and group chief executive officer Eric Cheng. The company became Malaysia’s first tech unicorn in July 2021 after it acquired a stake in iCar Asia Ltd, which is listed on the Australian Stock Exchange.
All this didn’t happen by chance. Cheng, a Gen.T 2019 honouree, firmly believes that his success proves that it doesn’t matter what kind of background you come from. “So long as you can dream it and work very hard, anything is possible,” he says. It also goes to show that Malaysians have what it takes to be successful on a regional and international level.
While Carsome is Malaysia’s first tech unicorn, Cheng is certain that it will not be its last. He hints that he knows of several other Malaysian startups that are poised to follow Carsome’s path, and we may see more unicorns sprouting up in the near future.
In mid-July Carsome sealed a deal with Catcha Group via a shareswap deal that saw the startup take a stake in the Australia-listed iCar Asia Ltd. This would be the first step in Carsome’s wider ambition to become the largest digital automotive group in Southeast Asia.
The acquisition of iCar Asia was strategic in nature, explained Cheng. According to him, Carsome has aspirations to become an end-to-end solution to car buyers with plans to include insurance, financing and after-sales service under its host of services.
Before iCar’s acquisition, Cheng shared that Carsome market reopens,” he says. Those plans have not changed, as the company still intends to list either through the traditional initial public offering (IPO) route or via a special-purpose acquisition company (SPAC). Carsome has yet to decide where they intend to list, but he affirms they will go public within the coming year.
Even though Carsome is on cloud nine at the moment, Cheng is quick to point out that there is a lot of work to be done. The online market for cars in Southeast Asia is estimated to be worth US$60 billion. After six years in operation, Cheng says he’s only getting started.
“We have not even begun to scratch the surface. Now that we are close to a billion dollars in revenue, that’s not even five per cent of the total market. I would say there are plenty of opportunities to grow,” he says.
“I like starting new businesses because I’m interested in finding better ways to tackle a problem and come up with a solution,” says Cheng. Simplifying the complicated process of selling and buying a car was the main drive and hook for Carsome, which now operates in four markets across Southeast Asia: Malaysia, Singapore, Indonesia and Thailand. The platform maintains market leadership in Malaysia, Indonesia and Thailand, making it the largest used car trading platform in the region.
Carsome faced challenges during its early days; its main challenge was to convince dealers and buyers to take a chance with them. Carsome’s breakthrough came after it launched its auction service. “We knew we finally made it after we saw dealers making offers for cars listed online without seeing it in person,” he recalls. Carsome makes the whole experience of buying a car to be low risk for the buyer. Should a buyer dislike the car they bought, they can return it to Carsome within five days of purchasing it, though with some terms and conditions, of course.
A New Way To Do Business
The Covid-19 pandemic has made selling cars physically more challenging but while the overall market has been impacted negatively, with showrooms forced to close during lockdown, Cheng says business is still good.
“We have created a new way for customers to buy and sell cars online. It is pretty remarkable considering that people are not even seeing the car they are buying in person, although they have it delivered to their doorstep,” he says.
Carsome is definitely looking at expanding its selection of vehicles. It plans to be the platform where you can buy any model you want. When asked how Carsome expects to sell next year, the company says it’s looking at a growth of two to three times based on the volume they are generating now.
“I would say we are performing ahead of projections even before lockdown. Even though lockdowns have slowed things down, we are hopeful that things will pick up again when the market reopens," he says.