SINGAPORE -- Japan's SoftBank Group has led a $360 million Series C funding round in Singapore online car sales platform Carro, propelling the Southeast Asian startup into the ranks of unicorns -- companies with a valuation of $1 billion or more.
Carro announced on Tuesday that the new round of financing, which included other investors such as Indonesia-based fund EV Growth, made the company the first automotive unicorn in Southeast Asia.
The startup said it will use the funds to expand its retail presence across Indonesia, Thailand, Malaysia and Singapore, countries which saw significant market growth the past year.
Carro also wants to beef up its financial services offerings by expanding beyond in-house loan financing, and will accelerate development of its artificial intelligence capabilities.
"Powered by AI, Carro's technology platform provides consumers with full-stack services and transparency throughout the car ownership process," said Greg Moon, managing partner at SoftBank Investment Advisers.
AI software scans images of cars to detect potential problems while mechanics at Carro check the vehicles for defects. This speeds up the transaction process by as much as 20% and reduces human error by up to 80%, according to Carro.
CEO Aaron Tan, who co-founded Carro in 2015, told Nikkei Asia that his company was exploring business-to-business financing and insurance. "Insurance should be customized for everybody," he said. "It shouldn't be one-size-fits-all."
The startup topped the annual ranking for high-growth companies in the Asia-Pacific region in research compiled by Nikkei Asia and Statista.
Carro had a 2016-2019 compound annual growth rate of 422% and 2019 revenues of $86 million. In the same period, employees grew from 10 to 400. The company said it recorded positive EBITDA -- earnings before interest, taxes, depreciation, and amortization -- for the second straight year.
Attention on Southeast Asian high-growth tech startups like Carro has increased, with a flurry of deals being made this year by young companies seeking to strengthen their position in a region where economies are set to rebound from the pandemic.
Singapore app developer Grab announced in April that it will go public in the U.S. through a merger with a special purpose acquisition company, which would value the startup at $39.6 billion.
Also known as a "blank check" company, a SPAC is a listed shell corporation set up with the intent to acquire an unlisted target company. This allows the target company to list on public exchanges without having to go through the arduous vetting process associated with initial public offerings.
Grab's Indonesian rival, Gojek, said in May it would merge with e-commerce platform Tokopedia in a bid to create one of the biggest tech conglomerates in the Association of Southeast Asian Nations. The new entity -- tentatively called the GoTo Group -- will cover everything from ride-hailing and digital payments to online shopping.
ASEAN's importance to digital companies is widely recognized. The gross merchandise value of the region's internet economy is expected to grow threefold to $300 billion by 2025 from 2020, according to research by Google, Temasek and Bain & Co.
Carro's Tan said the region's most populous country, Indonesia, was where his company did most of its business today. The nation is set to see vehicle sales "north of 200,000 units" this year, according to Tan.
The CEO also said Indonesia is going to be the main focus for Carro for the next few years thanks to the fresh funding in its Series C round. Tan said the deal with SoftBank was concluded in early May, with the investment giant contributing more than 50% in the round.
Tan said he met SoftBank's CEO Masayoshi Son in Japan, with talks on the deal taking about two months. The Japanese venture capital giant had previously backed China's ByteDance, owner of the TikTok short-video sharing platform, as well as U.S. ride-hailing service Uber.
Not all of SoftBank's investments have panned out. One of its most memorable flops has been with U.S. co-working space provider WeWork and its disastrous runup to a failed IPO in 2019.
SoftBank Group first invested in Carro through SoftBank Ventures Asia in 2016. Tan declined to say what he discussed with Son when they met, but said his next goal is to make Carro a decacorn -- a startup valued at over $10 billion.
"The very fact that we received the endorsement from SoftBank -- the Vision Fund itself, no less ... gives us further reason to believe that we will succeed."