Grab’s Vietnam rival Be Group secures 739.5 billion dong in fresh funding to boost expansion
The startup, a candidate to be the next technology unicorn in the country, aims for profitability this year
Jamille Tran
[HO CHI MINH CITY] Be Group – the Vietnamese owner of local ride-hailing app Be – on Wednesday (Jan 10) announced that it will receive 739.5 billion dong (S$40.4 million) in fresh funding from VPBank Securities, a unit of Vietnam Prosperity Joint Stock Commercial Bank (VPBank).
Upon the deal’s completion, VPBank Securities will hold a minority stake in Be Holdings, the parent company of Be Group, and be the first institutional investor of the technology startup, said Be in a statement.
Founded in 2018, Be is a multi-service consumer platform with services that include ride-hailing, food and goods delivery and telecommunications and finance.
The company secured a loan facility of US$60 million from Deutsche Bank in 2022, with an option to increase the financing to as much as US$100 million.
Be Group, which is the biggest Vietnam rival of Singapore’s Grab and Indonesia’s Gojek, claims to hold a 35 per cent share of the country’s ride-hailing market. The company has said it plans to achieve profitability with positive earnings before interest, taxes, depreciation, and amortisation in the 2024 financial year.
In an e-mail to The Business Times, a Be Group spokesperson said that the company recorded a five-times growth in the gross merchandise volume (GMV) processed on the platform from 2021 to 2023.
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As at December last year, Be Group has a network of 300,000 car and motorbike drivers on the platform, serving nine million users across 40 provinces and cities in Vietnam.
The goal is to grow to 20 million users in the country and reach its target of US$200 million in annual gross revenue by 2026.
Vietnam, which has a population of about 100 million, is forecast to have some 27.9 million users of ride-hailing and taxi services in 2026, according to figures from Statista Research Department.
The country’s trade ministry estimated its ride-hailing market turnover in 2021 at US$2.4 billion, with an average growth rate of 30-35 per cent per year during the 2015-2021 period.
According to the e-Conomy SEA 2023 report by Google, Temasek and Bain & Company, the GMV of Vietnam’s ride-hailing and food delivery industry could reach US$4 billion in 2025, with a compound annual growth rate of 16 per cent during the 2023-2025 period.
Intense competition
The competition among delivery service providers in Vietnam is high with many players in the market. Last December, South Korean food delivery platform Baemin announced its withdrawal from Vietnam after four years of operations.
Baemin described the Vietnamese market as being “characterised by high incentivisation”. Niklas Oestberg, the CEO of Delivery Hero, the Germany-based owner of Baemin, told Reuters last August that Vietnam’s food-delivery space is an exception in Asia with no profitability prospects even in the long term.
In 2022, Be Group also launched a food delivery service called BeFood and has since rolled out schemes such as reducing surcharges for small orders in order to acquire more customers. Other players earlier jumped into this sector with services such as GrabFood and GoFood.
Nguyen Minh Phuc, the managing partner at Vietnam-based consulting firm Emakase, said that one of the reasons for Baemin’s failure in Vietnam was the mismatch in the supply and demand sides of the platform. He believes that food delivery players can still turn a profit at some point if they have good business intelligence and a strong financial foundation to compete within a fast-growing digital market, which has expanded rapidly since the Covid-19 pandemic.
“Vietnam is not vastly different from other markets in the region and there is no reason that the model cannot work,” Phuc said. He added: “Ride-hailing and food delivery are still ‘money-burning’ businesses, but instead of splurging to obtain new users, firms are focused more on talent acquisition and business analysis to make more informed and impactful strategies as well as enhancing cost optimisation.”
Phuc said that Be’s aspirations to be a multi-service platform puts it in direct competition with other super-app builders such as e-commerce platform Shopee and Vietnam e-wallet Momo, both of which are providing services that overlap with Be.
“Building a super app enables firms to increase revenue and generate good metrics to fuel business growth,” Phuc stated. “However, they also tend to face challenges in operations optimisation as well as mounting competition with players in nearby sectors.”
With this latest infusion of capital, VPBank Securities said that Be Group is a candidate to be the next technology unicorn in Vietnam, a representative said.
Emakase’s Phuc also believes that Be Group could remain the second-largest ride-hailing player in Vietnam, behind Grab, and achieve its unicorn dream if it keeps up the momentum and explores markets beyond the country.
Widening its offerings
Be Group has deployed electric ride-hailing services with Green SM’s VinFast vehicles, integrated functions on Zalo – the most popular messaging app in Vietnam – and collaborated with other Vietnamese startups such as taxi connector Emddi and online bus ticketing platform Vexere.
Since 2019, Be Group has also partnered VPBank to co-launch payment and financial services, including the Cake digital bank.
The Be Group spokesperson said that the company is seeking to acquire new strategic investors and partners to widen its product offerings and potentially expand overseas.
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