EVEN though the year-end holidays have begun to induce the usual lull in markets - and even on roads - here, the nascent taxi-booking app market is not taking things slow yet.
GrabTaxi on Thursday announced that it has raised US$250 million in Series D funding entirely from Japan's telecommunications and Internet group Softbank, in what is described as the highest fourth-stage financing for a startup in South-east Asia.
But while an "amazing achievement" for a regionally focused company, industry watchers warned of longer-term sustainability challenges.
The Malaysia-based taxi-booking platform, one of the region's largest in terms of usage volume (see infographic: How big is GrabTaxi?), told BT that it will remain focused on growth and expansion within the region even after the bumper funding.
"There are 600 million potential taxi passengers in the region and by staying focused, we are able to grow faster and provide better solutions for these people, so I wouldn't refer to it as a narrow focus," said founder Anthony Tan, whose family owns Malaysia-listed Tan Chong Motor.
"In fact, we would go deeper into solving more problems for our passengers in this region. Each of our six markets, including Singapore, stands to receive a significant portion of funding compared to those of larger players that have to stretch their funding much further . . . after all, GrabTaxi is a solution built by South-east Asians for South-east Asians," he said.
"We've been considerably lucky with our investors since we started . . . Softbank's experience with global giants like Alibaba and Tokopedia will be invaluable as we continue to grow the brand and establish our roots deeper in our markets."
The latest funding, which marks the two-year-old startup's fourth funding activity in 2014, takes the total amount raised to-date to an impressive US$340 million.
"I believe this funding will help GrabTaxi dominate the South-east Asia market," said Christopher Quek, director and resident mentor at Angels Gate Advisory. Other taxi-booking app companies here (such as San Francisco's Uber) come from other continents which may have the funds but are not focused just on the region.
While GrabTaxi does not disclose the volume of taxi bookings by market, it estimates that there are three bookings made through the app every second across the region. This comes up to an average of 259,200 bookings per day. In Singapore, GrabTaxi takes a cut of 30 Singapore cents for each immediate booking, and 60 Singapore cents for each advance booking. The rates differ from market to market.
Its eye-catching funding success notwithstanding, GrabTaxi is up against players with far deeper pockets.
"But against the big boys like Uber, which have earnings greater than US$1 billion a year, this Series D is very much needed," noted Vinnie Lauria, general partner at Golden Gate Ventures. "It's a winner-takes-all situation. If they don't double down now to put up a fight, they've lost."
Uber, the ride-sharing startup reportedly worth US$18 billion, has bagged about US$1.5 billion in funding since its founding in 2009. Other players such as Brazil-based Easy Taxi and London-based Hailo have each raised some US$77 million.
Such staggering amounts of money, said market watchers, are needed, given a marketplace scenario where app companies have to acquire both the demand and supply sides of the equation: In this case, taxi drivers and commuters. Among other things, they would need to pay taxi drivers to use their app, give them free smartphones, reward commuters for using their app and recommending it to their friends, said Mr Quek.
And doing so across multiple geographies only amplifies the costs, noted Kuo-Yi Lim, managing director of Monk's Hill Ventures. GrabTaxi, for instance, operates in 17 cities across the region.
"It is literally a cash-burning exercise where taxi-booking apps pay everyone to use their app. The aim is to be the dominant player for a period so that the others will fold up or leave the market," Mr Quek said. "Differentiation on these apps is limited; what customers want are readily-available taxis. So GrabTaxi, with the latest funds, can pay taxi drivers more and incentivise them to use GrabTaxi."
However, for the startup to be sustainable in the long-term, it's going to need to break out of South-east Asia, Mr Lauria said, suggesting new markets such as India, China and South America - all of which Uber already has a presence.
Mr Quek agreed that GrabTaxi needs a breakthrough to maintain its lead in the long term. "In the mid-term, it is sustainable. GrabTaxi will have a market lead in South-east Asia even though it will be draining its funds to maintain that. The other rivals will possibly see their market share diminishing.
"But in the long term, once GrabTaxi dominates, it will need to recover from the cash drain and eventually find a balance between charging commuters and taxi drivers. Alternatively, they may need to find a new business model to sustain this cash-draining exercise to maintain its dominance."
But for now at least, GrabTaxi's Mr Tan said that the company is more focused than ever on its mission to revolutionise the South-east Asian transport industry.
"We're still a young company, just past our second birthday, so while an IPO is a possibility in the future, we are staying committed to growing the business throughout the region."
While GrabTaxi may be a Malaysia-based company, it is notable that Singapore - via Vertex Ventures - played a key role in helping it scale, said Edwin Chow, executive director of innovation and startups at government economic promotion agency Spring Singapore. "This, coupled with other recently announced deals involving Singapore-based startups, is a validation of the health of Singapore's Internet startup scene."