A lawsuit from one of Singapore’s most prominent media companies signalled an inauspicious start for Aaron Tan, after he co-founded an ecommerce platform for used vehicles in 2015.
For the 36-year-old Singaporean entrepreneur, the cease-and-desist notice that was served for alleged copyright infringement was the biggest challenge he faced in getting his start-up, Carro, off the ground. “We had been sued along the way by the big boys,” recalls the group chief executive at Carro’s headquarters in Singapore.
“If you have a pending lawsuit as a start-up, you can be almost guaranteed nobody will fund you,” he says, describing the lawsuit as “frivolous”.
Eight months later, the media company dropped its case, which allowed Carro to go on and establish itself as one of the fastest-growing companies in the region today — where it also has a presence in Thailand, Indonesia and Malaysia.
Now, the platform tops the FT’s annual ranking of the Asia-Pacific region’s high-growth companies, compiled in partnership with Nikkei Asia and Statista, a research company. Carro had a 2016-19 compound annual growth rate of 422 per cent and 2019 revenues of $86m. In the same period, staff numbers grew from 10 to 400.
Tan co-founded the business with Aditya Lesmana and Kelvin Chng, who now oversee Carro’s Indonesia and Singapore operations, respectively.
Their goal was to alleviate the uncertainty consumers face when buying second-hand cars. In Singapore, the sector had been tainted by complaints about dealers selling defective cars to buyers, who then had to shoulder the repair costs.
Carro certifies that its cars are fit for use, providing a detailed report of each vehicle’s flaws, and offering a 30-day wear and tear guarantee on sales.
Tan, who has a computer science degree, is an artificial intelligence enthusiast and has incorporated the technology into his business — something he says sets it apart from competitors in the used-car marketplace.
Carro’s AI software scans images of the cars to detect potential problems while mechanics check the vehicles for defects. This speeds up the process by as much as 20 per cent and reduces human error by up to 80 per cent, the company says. It has also deployed an AI-powered “voice bot” to respond to customer enquires.
“The idea is more about how do we use AI or machines really to automate as much as we can, and, more importantly, provide customers [with] a differentiated online experience,” says Tan.
Carro now employs more than 900 workers in the region, up from 400 in 2019 — a rise that Tan says he is not proud of. As the head of a technology-based firm, the Singaporean says he looks at growth not in terms of hiring more people or expanding teams, but in terms of developing AI to take over as many human tasks as possible.
He credits his backers and the rise of digitalisation in the region with his start-up’s growth. Carro counts SoftBank Ventures Asia, Mitsubishi Corp and EDBI — the corporate investment arm of Singapore’s Economic Development Board — among its investors.
Carro also has a consumer finance arm and Tan says it is the only used car marketplace that has been issued lending licences across its four key markets.
Despite a quarter-on-quarter revenue drop of around 70 per cent between April and June 2020 as the coronavirus pandemic shut down the region’s economies, Tan still expects total revenue growth in the full year to March 2021 to be 2.5 times that of the previous financial year.
“The demographic shift whereby people are more online is good,” he says. However, he declines to disclose how many cars Carro has sold in the past year.
Tan has his sights set on raising more than $150m in a series C funding round within the next six months, he says, and is eyeing a public listing in future, most likely in the US.
Further regional expansion is on the cards. But Tan says he is wary about possible regulatory hurdles, including limits on the foreign ownership of businesses in new markets, as well as the pandemic’s effect on travel.
Carro is not ruling out starting sales in Vietnam and the Philippines this year, although Tan’s main focus is on deepening its presence in its four existing markets.
“It is so hard for management to move around,” he says, referring to travel restrictions. “I shouldn’t be expanding laterally. So why are we not going deeper [into Carro’s current markets] versus trying to distract ourselves by going to more markets?”