Carousell, Singapore’s startup darling, has found its path. In November, the seven-year-old mobile classifieds service announced a merger deal with Telenor-owned rival, 701Search. The deal values the combined entity at $850 million and brings together two of the region’s most prominent classifieds businesses.

The Singapore-based company was “unbelievably lucky” to pick up this deal, an investor whose portfolio includes classifieds businesses told The Ken. This turns the business into a genuine contender for unicorn status (a valuation north of $1 billion), said the investor.

The Carousell story is well known in Southeast Asia startup folklore. It was founded by three early-twenties graduates of the National University of Singapore (NUS) after they spent a year in Silicon Valley as part of their undergraduate program.

The company only began to monetise its service in the past few years, adopting a classic classifieds approach by charging for advertising and visibility with a focus on high-priced assets. Profitability, however, remained a distant dream. Not anymore. 701Search is a company even rarer than a unicorn—it’s a profitable business. The combination of Carousell’s reach and 701Search’s profitability is seen as a perfect match.

For Carousell, the deal is a vindication of its perseverance. Southeast Asia is a region where major startup exits remain rare despite increased firepower from investors (a topic that The Ken recently explored in depth), but Carousell has had its past temptations. Its three young leaders once rejected a $100 million acquisition offer that Bloomberg reported would have made CEO Siu Rui Quek (and co-founders Marcus Tan and Lucas Ngoo) “wealthy beyond his dreams.”

Not only did Carousell choose to stay the course, but it also earned major validation this past April when it closed a $56 million investment from OLX, the classifieds business belonging to Naspers. South Africa-based conglomerate Naspers is best known for an early and lucrative investment in Chinese internet giant Tencent.

One industry source said at the time that the deal could be a precursor to an eventual takeover from OLX, a process that’s fairly common for the group. Carousell’s tie-in with 701Search furthers that thinking—it is precisely the kind of regional consolidation one would expect of a company on its way to becoming a must-buy business for a major global player like OLX.

But success is not a guarantee. Both Carousell and 701Search’s assets will continue to live on independently post the deal. The challenge for Carousell will be in how it allows each service to grow while replicating success across its portfolio. There may be opportunities to lower operational costs. The investor quoted earlier said retaining the “undoubted” talent of 701Search staff will be critical—this is truly an operational challenge.

Easy Carou-Sell

Carousell has raised over $180M from marquee investors such as DBS, Southeast Asia’s largest bank; Japanese e-commerce titan Rakuten; global VC giant Sequoia Capital; and EDBI, the corporate investment arm of Singapore’s Economic Development Board.


Jon Russell

Jon Russell is Southeast Asia editor for The Ken based in Bangkok. Originally from the UK, Jon moved to Thailand in 2008. He’s passionate about telling thoughtful business stories, and tracking the impact of the internet in his adopted home of Southeast Asia.

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