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Tuesday, August 2, 2016

Analysis on Carousell (Updated Oct 2018)

Quick update on Caurosell numbers

1) FY2017 revenue is 1.727M USD on costs of 31.5M USD or so! Super huge expansion in costs! TIA has a good analysis on numbers at :

2) June 2018, raised a further Series C 85M USD from rakuten and a bunch of investors. Price per share is 14.925 USD.  DBS also participated. Market cap post money is about 27,031M shares x 14.925= US$403M USD. Founders ordinary shares of 2.6728M are worth on paper about US$40M before all the coupons and liquidity preferences. Each about 9.9% each before options. 

3) With the dramatically increased cost and revenues not really growing, we are looking at 3 year runway if no more rounds. It is extremely critical to see how revenues grow this year. I would argue 2018 (or if kind investors, 2019) is a crunch year for management to prove they can monetize and grow into the 400M valuation. At 400M valuation it means their revenues should be at least 30-40M USD annually and growing rapidly. 


Edit: James has reached out to say Quest came in pre-seed. Very likely since it is ordinary shares. It also means their multiple on paper is higher than 47 times!

Mobile marketplace carousell just announced a 35.8m usd round valuing themselves at about 236m usd or about 320m sgd. this is probably the largest pre revenue valuation i have ever seen in this region and is testimony to their rapid growth and probably cheap money driving valuations.

No one has exited so far so it's all paper gains and all in the game. Biggest winner I can see is NUS who incubated them and so own a small stake worth on paper over 5m sgd. Each of 3 founder owns same stake at about 12.5% of company in ordinary shares now. That's about 40m on paper if I assume no funny liquidity preference or coupon terms. Wonder if private banks will give some liquidity based on such stakes. Maybe cut by 50-75% to offer loans? 

Seed round vc/angel like 500 durian, quest and Darius make about 47 fold on paper. Sigh.. Pity I passed on it last time. Can't even remember why. Would have made about 1m paper profit. Only consolation is that invested in 500. But much smaller order of paper gain :(

The other thing that is interesting is that Rakuten is the lead investor for seed, then sequoia did the vc series a round at 20.4m valuation and now Rakuten is back valuing them 11-12 times more after 2 years. Why skip the series A when it was so much cheaper? And in a sense it is also a form of averaging up for Rakuten. They are now biggest shareholder with about 33% stake. I don't pretend to know how huge corporates work so perhaps someone can share.

I met siu rui recently at a panel where minister Chan Chun sing was presiding. He hustled and tried to get minister to use carousell and struck me as very driven in his goal to make everyone use it. When questioned about revenue model, he spoke about classifieds margins and how freemium and other measures can be great monetization. He then refocused on usage regionally and stated that as his goal.

I also tried carousell once to see what it was all about and it is truly very easy to use and I managed to sell a few items but only the well discounted ones. It has a strong appeal for bargain hunters and perhaps to just get rid of stuff.

The beauty of raising without revenue based on usage is that no one really knows the ultimate potential. The true test will be when revenue tap is switched on. What will be the gmv sold? How many will pay for whatever premium service created?  How will epayment fees, delivery, escrow fees eat into the model. Will it be a lucrative business generating >10m profit annually to justify this valuation? My gut is this situation is not like Facebook or google. If fees are across the board or just certain categories but everyone pays, cheaper competitors will enter and users may move. If fees are only charged on freemium model, then will it be large enough to justify these numbers? Left to me, I would pick the latter first. Entrench more and evolve more sticky features and then do the former. Perhaps that's why so much money was raised. To have a war chest to slowly experiment. Carousell spent lost only 1m in 2014. Even if losses are at 3m this year, they have a 10 year runway!

Good news is all the shareholders seem to think numbers can grow even more. No one is exiting at all at least based on filings so far. Perhaps revenues and profits are the wrong target, perhaps with huge traffic across the region, a buy out by Rakuten or another corporate giant is also possible. We shall see. But in mean time, things are really heating up in our startup space!


  1. That regret of not investing in something that went up 50x afterwards is very real.

  2. Totally agree Arthur. What this experience taught me is that must be more open minded in assessing each company and to not just look at revenue traction but also to consider usage traction. If usage strong, its a signal to at least meet with founders. We also learned that to truly not miss out, must always pay attention to every lead.

    The former point of changing criteria is easy to do and so we have adjusted criteria and subsequently invested in alodoktor, but the latter is still hard for us as we are semi-retired and don't really want to be working like a full time VC who need to have "miss no deal" attitude.

    ps: i have updated caurosell analysis a bit more.