Ride-hailing frenzy makes Grab the world's top VC recipient for Q1

Singapore

SINGAPORE-BASED ride-hailing giant Grab has emerged as the world's largest magnet of venture capital (VC) funds for the first quarter of this year, with US$2.5 billion raised in its series G funding, said KPMG's Venture Pulse report on Wednesday.

Grab's fund injection propelled Singapore to a record US$2.68 billion in VC investment across 23 deals for the Q1 2018 - the largest amount raised by Singapore startups in one quarter since at least 2010, the earliest year of data in the report.

Chia Tek Yew, head of financial services advisory in KPMG Singapore, said Singapore had not pulled in an investment exceeding US$1 billion until Q1 this year.

"It is testament to the maturing of Singapore's ecosystem that a business such as Grab could be built here to tackle the regional market."

Other deals completed in the same quarter in Singapore pale in comparison: The next largest VC investment recipient was logistics company Ninja Van, at US$87 million, followed by software solutions provider Capillary Technologies at US$20 million.

Rounding out the top five in Singapore were game-developer Virtuos, which recently moved its headquarters from Shanghai to Singapore, at US$15 million, and fashion brand Love, Bonito at US$13 million.

Mr Chia noted that venture capitalists are becoming more selective as the ecosystem matures.

"In addition to assessing the company's market potential and ability to scale its business, VCs are also seeking out companies whose solutions address a unique challenge in the market," he said.

Looking beyond Singapore to the South-east Asian region, the other massive funding completed was for Grab's rival, Indonesia-based Go-Jek. The company raised US$1.5 billion through its series E funding, making it the fourth largest VC recipient in the world for Q1 2018.

KPMG said in the report that the ride-hailing industry was a "big winner of VC investment this quarter, as companies vied for market dominance in less-saturated jurisdictions".

"South-east Asia has been identified as a major target for VC investment because of its relatively high population and low market penetration rates in sectors deemed saturated in other global markets."

An earlier report by Google and Temasek had said that ride-hailing services in South-east Asia would reach US$5.1 billion in gross merchandise volume last year, more than double the US$2.5 billion in 2015.

Two other ride-hailing giants, Lyft and Uber, placed second and fifth in the global rankings respectively. This means that four of the world's top five VC recipients were from the ride-hailing industry.

Globally, VC investment rose from US$46 billion in the Q4 2017 to US$49.3 billion in Q1 2018, spearheaded by the top five deals worth over US$1 billion.

Mr Chia said: "The ride-hailing industry is moving into a consolidation stage, where key players are emerging in each market.

"The likelihood of these key players attracting more VC investments could possibly stem from the adjacent businesses that they are expanding into, such as food delivery and payment platforms."

Such factors already look to be the push for further investment in ride-hailing companies for the second quarter of 2018.

The same day the KPMG report was released, Allianz X, the investment unit of German insurance company Allianz Group, announced a US$35 million investment into Go-Jek.

Nazim Cetin, chief executive of Allianz X, said: "Go-Jek has demonstrated a track record of success within the transportation, logistics and payment sectors and we look forward to supporting its continued growth."