PETALING JAYA: Early last week, the market was abuzz with news of another funding round by Carsome.
The used car dealership had raised US$50 million from a stable of existing and new investors. Ironically, there were no Malaysians among them.
This brings back memories of yet another Malaysian unicorn that also failed to draw the interest of local funds. Nonetheless, it went on to become a major player in the ride sharing, online payment and delivery businesses.
The start-up, Grab, was given the cold shoulder when it approached local sovereign wealth fund Khazanah Nasional Bhd.
According to its then chief investment officer Azmil Zahruddin the fund’s investment strategy “is to focus on large investments, not direct start-up deals”.
Instead, Khazanah chose to invest in Uber, a ride-hailing company based in California. The country’s second largest pension fund Kumpulan Wang Amanah Pencen (KWAP) also threw in its lot with Uber, forking out US$30 million (RM124 million) back in 2016.
But just three years later, Uber was forced to sell its business to Grab and exited the Southeast Asian region.
Grab eventually turned to Temasek, Singapore’s equivalent of Khazanah, which came in with S$12.5 million (RM32.25 million) through its unit Vertex Venture in 2014.
It went on to list on the New York Stock Exchange in December 2021. By then, it was already valued at US$40 billion (RM165.76 billion).
This made it more valuable than Malayan Banking Bhd, the most valuable company on Bursa Malaysia.
While its valuation has dropped 72.26% since its listing, it still has a market capitalisation of US$13.37 billion (RM61.70 billion), and is still considered one of the most successful Malaysian start-ups.
It has outperformed regional rivals such as Uber by a mile.
In the case of Carsome, could Malaysia be missing out on yet another unicorn-level technology investment?
Carsome had appealed to the finance ministry to “strongly recommend” that its funds and investment companies chip in to help it raise US$10 million (RM46.18 million) in its funding round.
Deputy finance minister Steven Sim’s response to the company’s appeal was yet another standard official response to tough questions.
“It is not within the purview of the deputy minister’s office to recommend or make any decisions pertaining to investments by the ministry or its agencies,” he told FMT Business.
He went on the say that he had passed Carsome’s request to the relevant department for “review and any further action deemed necessary”.
Grab’s lack of interest in a listing on Bursa Malaysia has been attributed to a lack of support from the government.
As of now, Carsome is not interested either. Instead it has sought listings in the US and Singapore stock exchanges with a valuation of about US$2 billion (RM9.23 billion).
Dollars and cents aside, many have questioned why a Malaysian company, founded by locals and supporting locals did not get the nod from local institutional investors.
In yet another standard reply, Sim said “the government has a role to play in building a robust and conducive environment for start-ups to thrive locally”.
“Our focus has been to engage with local stakeholders across the ecosystem to ensure that policies, infrastructure, initiatives, and facilities such as tax incentives and grants, are put in place to position Malaysia as a hub for technological innovation.”
Sim added that there are existing structures in place within the ministry of finance as well as its agencies to review proposals and make decisions based on merit, in a fair and independent manner.
Malaysia made a costly mistake when it failed to see the potential of a home-grown unicorn.
Will it make the same mistake with Carsome? Only time will tell.