The unicorn born of pricey cars

Hi, this is Olivia in Singapore. Where I live, owning a new Toyota Prius can set you back about $150,000 with all costs included, so it’s no [View in browser]( [Bloomberg]( Hi, this is Olivia in Singapore. Where I live, owning a new Toyota Prius can set you back about $150,000 with all costs included, so it’s no wonder used-car platforms are a hot commodity. But first... Three things you need to know today: • The Call of Duty pro gaming league [is not thriving]( • Singapore urges employers to [allow more flexible working]( • ASML surprised with a 22% [miss on first-quarter bookings]( Fundraising in a VC winter It’s incredible to watch people making some of the biggest purchases of their lives through a mobile screen, spending tens of thousands on a vehicle that they’ve yet to touch. But that’s now grown popular in Singapore, a place whose so-called lemon law — providing redress to purchasers who were sold dud goods — was inspired by the notoriously unreliable second-hand auto market. As ecommerce becomes the norm in Southeast Asia, buying and selling cars online is slowly slipping into the mainstream as well. That’s what SoftBank Group Corp.-backed Carro is betting on, as it sets out on a pre-IPO funding round that could raise its valuation beyond $1.5 billion. It’s an ambitious goal at a time when [venture funding is drying up](, but that speaks to the company’s confidence. Getting funded in Singapore these days is a tricky task, as startups are expected to demonstrate both growth potential and a sturdy balance sheet. VCs are being increasingly picky, as shown by Southeast Asia having its worst funding season in more than five years, according to a report by venture firm January Capital. Carro is running into that plus (a) a sleepy market for new public offerings and (b) persistent criticism that it’s little more than a bigger, online version of a traditional car dealer. One person I spoke with said the business model is asset-heavy, expensive and operationally complex. Another potential investor wondered if the used car industry in Southeast Asia was ripe for consolidation. Carro and its main rival Carsome have been competing for years, and they are both still unprofitable. To some extent, these observations are valid. But Carro has been grappling with those issues since it was founded by CEO Aaron Tan and two fellow Carnegie Mellon graduates in 2015. The company’s earned the confidence of Masayoshi Son’s SoftBank, along with Singapore’s GIC and Temasek, by building digital systems to wring some of the complexity and unpredictability out of its sector. Over the past nine years, Carro and Carsome have developed numerous in-house inspection tools, processes and guardrails to better estimate the condition and market prices of cars, shorten the time to complete a transaction, and also push higher-margin products like loans and insurance. The demand, at home in Singapore at least, is most certainly there. Carro is also growing in Malaysia and Indonesia — which contribute about 30% of its gross profit each. Other operations in Thailand, Hong Kong and Japan are more nascent. Tan most recently demonstrated what he calls the Shazam of engines: an AI system for diagnosing the health of a second-hand car from the sound of its motor. I can’t speak for how reliably that works, but Tan considers it a trump card for his growing company. The proof of the value of such enhancements can only come from showing that the business can make good money at scale. While efficiencies achieved through tech and larger vehicle volumes have helped Carro grow gross profit by 45% to more than $88 million for the year ended March, it is still some way from turning cash flow positive. Still, far from showing signs of pressure trickling down from its existing VC backers, the firm is going out and talking to more investors and discussing a higher valuation. Carro would have us believe it has the financial prudence, tech systems and industry knowhow to solidify and grow its position in a highly challenging market. Its leaders are confident the company is an appealing proposition for public markets too, and Tan told me Carro is ready for an IPO at any time. Time will tell. As one of Carro’s investors put it, technology without discipline can lead to an early head start but also an early crash.—[Olivia Poh](mailto:opoh@bloomberg.net) The big story Once an underdog dwarfed by foreign behemoths, Viacom18 and its JioCinema streaming service are poised to become the most powerful player in the $28 billion Indian media and entertainment industry. Reliance, Viacom18’s largest shareholder, has plans to merge the business with Disney’s India operations, [adding dozens of cable TV channels and tens of millions of streaming subscribers.]( One to watch European Commissioner for Financial Services Mairead McGuinness joins Caroline Hyde and Ed Ludlow to discuss the fast-moving digitalization of the financial sector, including the impact of AI on banks. Get fully charged Taiwan is engaging in its own form of chip diplomacy, parlaying its role as the world’s chip kingpin to secure [a string of international cooperation pacts.Â]( Grand Theft Auto maker Take-Two plans to cut 5% of its workforce and drop several projects in [a cost-cutting drive.]( Airchat is the latest Silicon Valley social sensation, offering an invitation-only, audio-focused [service for “dipping into conversations.”]( Amazon Prime memberships jumped 8% to [reach a new high.]( More from Bloomberg Get Bloomberg Tech weeklies in your inbox: - [Cyber Bulletin]( for coverage of the shadow world of hackers and cyber-espionage - [Game On]( for reporting on the video game business - [Power On]( for Apple scoops, consumer tech news and more - [Screentime]( for a front-row seat to the collision of Hollywood and Silicon Valley - [Soundbite]( for reporting on podcasting, the music industry and audio trends - [Q&AI]( for answers to all your questions about AI Follow Us Like getting this newsletter? 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