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Brazilian ride-hailing company raises US$100m from SoftBank
[SAN FRANCISCO] Brazilian ride-hailing startup 99 raised US$100 million from SoftBank Group Corp to help it compete with Uber Technologies Inc in Latin America's largest economy. For Uber, the investment isn't a good sign. SoftBank has been pouring money into various ride-hailing companies not named Uber, including US$5 billion for China's Didi Chuxing this year.
And Latin America has been one of the regions for Uber where margins are the highest, a person familiar with the matter said, even if it doesn't contribute as much revenue as North America. Competition can drive down Uber's margins as companies spend money on subsidies to compete for market share.
Sao Paulo, Brazil's most populous city, has ranked among Uber's busiest cities in the world by the number of trips taken. 99 operates in more than 400 cities in Brazil, offering both on-demand cars and taxis.
The SoftBank investment comes less than six months after 99 raised US$100 million from Didi and Riverwood Capital. "99 was launched in 2012, with only three entrepreneurs; today, we are an urban mobility startup with a team of over 350 people," Peter Fernandez, the chief executive officer of 99, said in a statement Wednesday. A SoftBank executive sat down with Uber competitor Lyft Inc's President John Zimmer in the past few weeks, a person familiar with the matter said. A Lyft spokesman declined to comment on what they discussed. SoftBank didn't immediately respond to a request for comment.
Last year, Uber struck a deal with Didi that gave the San Francisco-based company a 17.5 per cent stake in Didi and it exited the Chinese market, taking the two companies out of direct competition. But Didi has investments in many of Uber's local rivals, including Lyft Inc., Indian competitor Ola, and Southeast Asian rival Grab.
Last year, Uber generated $20 billion in bookings on US$6.5 billion in net revenue. The company lost $2.8 billion globally, not including another US$1 billion or so loss in China.