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Grab cashes up for a bigger taxi fight
GRAB is arming itself for a long fight. The ride-hailing firm won one big battle earlier this year when it pushed US giant Uber out of South-east Asia. Much of its latest US$1 billion funding round will be spent in Indonesia, where the Singapore-based group is up against homegrown rival Go-Jek. That country is where the region's tech landgrab will be won or lost.
Grab said on Thursday that its current fundraising effort had hit US$2 billion, after a gaggle of backers including Microsoft co-founder Paul Allen's Vulcan Capital matched June's US$1 billion investment by Toyota Motor.
The newcomers put a US$11 billion price tag on the group, according to sources familiar with the financing. That makes Grab by far the most valuable startup in the region of 650 million people.
The territory that stretches from Myanmar to the southern tip of Indonesia is a crowded battleground for purveyors of ride-hailing, food delivery and shopping services looking to replicate China's breakneck growth.
The population is young and tech-savvy while logistics are abysmal. The problem is turning this potential into profit. Grab already counts SoftBank and peers Uber and Didi Chuxing among its shareholders.
An extra US$1 billion is helpful, and the company says it could yet raise more. But the speed with which it followed the Toyota deal with fresh cash is also a reminder of the continuing drain on resources in a price-driven market.
Anthony Tan's group says it will use the money in Indonesia, where, like its rivals, it is moving beyond taxis into payments and food delivery. As the region's most populous market, Indonesia is where the decisive tech battles will be fought. It is also where most cash will be scorched, as startups sacrifice margins in an attempt to keep customers active on their app.
Grab says it is making a profit in some businesses in some countries. It claims a top position in Indonesia though App Annie, an analytics firm, reckons Go-Jek, which is backed by China's Tencent, is ahead by monthly active users.
For now, both sides enjoy plentiful appetite from investors: Bloomberg reported in June that Go-Jek's backers had offered it another US$1 billion. But a victory for Grab - and a return for its investors - remains some way off. REUTERS