China’s most prominent ride sharing company, Didi Chuxing, and SoftBank, a leader in the Japanese telecommunications and internet services industries, have invested a combined $2 billion in southeast Asian ride-hailing company Grab, Johana Bhuyan of recode.net reports. Grab expects to collect an additional $500 million dollars during this round of funding. It will use the money to expand geographically, as well as to bolster GrabPay, its mobile pay service.
Grab, founded in Singapore in 2012 as “MyTeksi,” now operates in 65 cities across 7 countries in Southeast Asia. The company serves three million daily users, Bhuyan says, and claims to hold 95% of the taxi market and 71% of the ride hailing market in the region.
Didi initially invested in Grab in 2015, during the latter company’s $350 million Series E round. SoftBank led Grab’s $250 million series D round in 2014.
Didi owns Uber’s China operation, and holds stake in Lyft, as well as in India’s largest ride-hailing company, Ola, and Brazil’s leading ride-hailing company, 99. SoftBank invested $100 million in 99 back in May, and a $210 million in Ola in 2015.
Rather than compete with one another across foreign markets, many ride-hailing companies are choosing to cooperate, sharing their driver networks with each other. As a result of the Lyft-Didi alliance, for instance, a Lyft user traveling in China will find Didi cars listed when he opens his Lyft app, and vise versa. When it closed a $5.5 billion funding round in April, Didi said it planned to use the money to create a “sustainable global mobility ecosystem.” The investment in Grab marks another step toward doing just that.
Uber took a different approach toward establishing itself in international markets: it went head to head with established local companies like Didi in China. Its attempt to break into the Chinese market cost Uber about $2 billion, Kara Swisher of recode wrote last August. In the end, the companies called a truce: Didi gained control of Uber’s Chinese assets, adding $7 billion to its valuation, but Uber was granted a 20% stake the expanded Didi company, which] invested $1 billion in Uber.
SoftBank is also making inroads into self-driving technology. Just last week, it co-led a $159 million investment round in Nauto, which develops technology in driverless cars.
According to Arjun Kharpal of CNBC, Nauto plans to “use the money to grow and develop its camera technology and install it into more cars globally.”
Self-driving technology may be intertwined with the ride-hailing industry for the foreseeable future. Last week, Lyft announced intentions to add driverless cars to its network by the end of this year. Last September, Grab partnered with NuTonomy, a Cambridge based MIT spinoff that specializes in autonomous car technology, to allow users to try driverless cars for free. Uber’s Advanced Technologies Center in Pittsburgh, founded in 2015, employs some of the industry’s top minds in the effort toward self-driving technology. Lyft will create a similar operation, it said in the aforementioned announcement.
Cooperation is doing much to spur the ride-hailing as well as the autonomous car industry. GM and BMW also participated in Nutonomy’s investment round last week, and such automakers will likely team with ride hailing companies, which can provide platforms for the honing of autonomous technology.
The expansive alliance network that includes Didi, Left, Grab, and others is making it easier for customers to find rides around the world. Of course, the easier that becomes, the more ride hailing will pull ahead in the transportation space.
But Uber, having lost billions in a more or less futile attempt to infiltrate the Chinese market, may be left behind, unless that company can outstrip competitors in the race toward autonomous technology.
Featured image via Flickr/Jon Russell