China’s Didi is laying off 15% of its staff

China’s largest ride-hailing firm Didi plans to let go 15 percent of its employees or about 2,000 people this year, sources told TechCrunch. The cut comes as the beleagured transportation giant copes with a stricter regulatory environment that puts a squeeze on driver supply and backlash from two high-profile passenger murders last year. Chief executive Cheng […]

China’s largest ride-hailing firm Didi plans to let go 15 percent of its employees or about 2,000 people this year, sources told TechCrunch. The cut comes as the beleagured transportation giant copes with a stricter regulatory environment that puts a squeeze on driver supply and backlash from two high-profile passenger murders last year.

Chief executive Cheng Wei made the announcement during an internal meeting Friday morning as he told management that Didi will scale back its non-core businesses and step up investments in key areas, including safety technology, product engineering, offline driver management and international operations.

The sources did not specify which of Didi’s business units are affected by the layoff but said Didi will add 2,500 new hires by the end of the year to work on company priorities, which will give the company a total headcount of about 13,000 staff around the world.

In addition, Didi will work to ramp up operational efficiency, an issue that Didi also addressed during a major re-organization in December. A Didi spokesperson declined to comment.

Earlier this week, Chinese tech news portal 36Kr reported that Didi lost $1.6 billion in 2018 and spent $1.67 billion on subsidies for drivers. According to an internal memo Cheng made in September, Didi lost 4 billion yuan ($590 million) in the first half of 2018 and the company had not been profitable for six years.

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China’s Didi reportedly lost a staggering $1.6 billion in 2018

China’s largest car-hailing company is facing relentless pressure from all fronts. Beijing-based Didi Chuxing reportedly lost a staggering 10.9 billion yuan ($1.6 billion) in 2018, according to financial data that Chinese news site 36Kr obtained. For some context, Uber posted a net loss of $939 million on a pro forma basis and an EBITA loss at $527 million during […]

China’s largest car-hailing company is facing relentless pressure from all fronts. Beijing-based Didi Chuxing reportedly lost a staggering 10.9 billion yuan ($1.6 billion) in 2018, according to financial data that Chinese news site 36Kr obtained.

For some context, Uber posted a net loss of $939 million on a pro forma basis and an EBITA loss at $527 million during Q3 2018.

Didi has not responded to TechCrunch’s inquiry about its losses, but an internal letter leaked in September offers a glimpse at the depth of Didi’s troubles. According to the memo from founder and chief executive Cheng Wei, Didi had been operating in the red for six consecutive years and lost 4 billion yuan in the first half of 2018. At this moment, the transportation giant’s predicament appears to be multipronged.

Public backlash

The ride-booking app capped off 2018 with a bleak outlook after two female passengers were killed by their Didi drivers in separate instances, drawing ire of the government and triggered a nationwide backlash underpinned by a #DeleteDidi campaign that’s reminiscent of the #DeleteUber movement.

Didi responded with a fold of security measures, including stricter identity checks on drivers and a major reorganization to place customer safety ahead of growth. Hitch, the carpooling service that was complicit in both accidents and was popular among riders for its relatively cheap fares, is suspended indefinitely, a move that could exclude the more price-sensitive consumers.

Cash-burning model

Didi’s struggles had preceded the passenger murders. Cheng admitted in his memo that the company’s expansion was getting out of hand. “The expansion frenzy planted seeds of trouble and our internal system couldn’t keep up with our expansion.”

During the first six months of 2018, Didi shelled out about $1.7 billion in subsidies for drivers and steep discounts for passengers as competition intensified, Bloomberg reported citing sources. In the entire year, Didi burnt through a total of 11.3 billion yuan ($1.67 billion) on driver subsidies according to the 36Kr report.

Subsidies have played a key role in the rise of Didi and many other aspiring consumer-facing services in China. Investors dole out big bucks for early movers to gain market share rather than strive for profitability. That tactic has helped catapult tiny startups into billion-dollar businesses such as bike-rental service Mobike, but it has also led to the dramatic fall of some, Mobike’s peer Ofo being one alarming example.

Regulatory hurdles

Following Didi’s safety incidents, Chinese authorities hastened their pace to reinforce rules they had long laid out for the fledgeling industry, and some of the policies prove costly to uphold. For one, ride-booking drivers now need to obtain two licenses — one for the drivers themselves and the other for their vehicles to operate commercially.

The new requirement discourages part-time drivers as the costs of owning a commercial vehicle outpace the returns of taking up the gig work. Didi has tried to neutralize the constraint by offering test preps to drivers and teaming up with car rental businesses to equip drivers with the licensed vehicles. But these moves are set to incur new costs for Didi’s already money-burning business. The mobility startup was mulling a multi-billion-dollar initial public offering in 2018 that could value it upwards of $70 billion, Wall Street Journal reported last April.

New rivals

Another stumbling block for the firm is the swarm of new contenders eyeing a market long dominated by Didi after it swallowed up competitor Uber China. Neighborhood services marketplace Meituan, for instance, began to offer shared rides last year though it later put a hold on the capital-intensive new business to stay focused on its dining and hotel-booking units. On the other hand, traditional automakers, including a few that are state-owned such as BAIC, are charging full speed ahead by luring drivers with more favorable commission rates.

These newcomers have a long way to go before they could threaten Didi’s share, but Alibaba has a tool that can potentially help them grow. The ecommerce titan is not competing directly against Didi. Instead, its AutoNavi map service doubles as a ride-hailing platform that lets users book cars from a list of third-party operators. The model in effects levels the playing field for smaller players to challenge Didi, as they all compete on equal terms to court AutoNavi’s 1 billion daily active users.

Transportation Weekly: Amazon’s secret acquisition and all the AV feels

Welcome to Transportation Weekly; I’m your host Kirsten Korosec, senior transportation reporter at TechCrunch. I cover all the ways people and goods move from Point A to Point B — today and in the future — whether it’s by bike, bus, scooter, car, train, truck, robotaxi or rocket. Sure, let’s include hyperloop and eVTOLs, or […]

Welcome to Transportation Weekly; I’m your host Kirsten Korosec, senior transportation reporter at TechCrunch. I cover all the ways people and goods move from Point A to Point B — today and in the future — whether it’s by bike, bus, scooter, car, train, truck, robotaxi or rocket. Sure, let’s include hyperloop and eVTOLs, or air taxis, too.

Yup, another transportation newsletter. But I promise this one will be different. Here’s how.

Newsletters can be great mediums for curated news — a place that rounds up all the important articles a reader might have missed in any given week. We want to do a bit more.

We’re doubling down on the analysis and adding a heaping scoop of original reporting and well, scoops. You can expect Q&As with the most interesting people in transportation, insider tips, and data from that white paper you didn’t have time to read. This isn’t a lone effort either. TechCrunch senior reporter Megan Rose Dickey, who has been writing about micro mobility since before the scooter boom times of 2017, will be weighing in each week in our “Tiny But Mighty Mobility” section below. Follow her @meganrosedickey.

Consider this a soft launch. There might be content you like or something you hate. Feel free to reach out to me at kirsten.korosec@techcrunch.com to share those thoughts, opinions, or tips.

Eventually, we’ll have a way for readers to sign up and have Transportation Weekly delivered each week via email. For now, follow me on Twitter @kirstenkorosec to ensure you see it each week.

Now, let’s get to the good stuff.


ONM …

There are OEMs in the automotive world. And here, (wait for it) there are ONMs — original news manufacturers.


This is where investigative reporting, enterprise pieces and analysis on transportation will live.

We promised scoops in Transportation Weekly and here is one. If you don’t know journalist Mark Harris, you should. He’s an intrepid gumshoeing reporter who TechCrunch has been lucky enough to hire as a freelancer. Follow him @meharris.

Amazon quietly acquired robotics company Dispatch to build Scout

dispatch-amazon-scout
Remember way back in January when Amazon introduced Scout, their autonomous delivery bot? There was speculation at the time that Amazon had bought the Estonian-based company Starship Technologies. Harris did some investigating and discovered some of the intellectual property and technology behind Scout likely came from a small San Francisco startup called Dispatch that Amazon stealthily acquired in 2017.

It’s time to stop thinking about Amazon as just an e-commerce company. It’s a gigantic logistics company, probably the biggest on the planet, with a keen interest — and the cash to pursue those interests — in automation. Think beyond Scout. In fact, wander on down this post to the deal of the week.


Dig In

Each week, transportation weekly will spend a little extra time on an approach, policy, tech or the people behind it in our ‘Dig In” section. We’ll run the occasional column here, too.

This week features a conversation with Dmitri Dolgov, the CTO and VP of engineering at Waymo, the former Google self-driving project that spun out to become a business under Alphabet.

waymo-google-10-years

Ten years ago, right around now, about a dozen engineers started working on Project Chauffeur, which would turn into the Google self-driving project and eventually become an official company called Waymo. Along the way, the project would give rise to a number of high-profile engineers who would go on to create their own companies. It’s a list that includes Aurora co-founder Chris Urmson, Argo AI co-founder Bryan Salesky and Anthony Levandowski, who helped launch Otto and more recently Pronto.ai.

What might be less known is that many of those in the original dozen are still at Waymo, including Dolgov, Andrew Chatham, Dirk Haehnel, Nathaniel Fairfield and Mike Montemerlo.

Dolgov and I talked about the early days, challenges and what’s next. A couple of things that stood out during our chat.

There is a huge difference between having a prototype that can do something once or twice or four times versus building a product that people can start using in their daily lives. And it is, especially in this field, very easy to make progress on these kinds of one-off challenges.

Dolgov’s take on how engineers viewed the potential of the project 10 years ago …

I also use our cars every day to get around, this is how I got to work today. This is how I run errands around here in Mountain View and Palo Alto.


A little bird …

We hear a lot. But we’re not selfish. Let’s share.
blinky-cat-birdAn early investor, or investors, in Bird appear to be selling some of their shares in the scooter company, per a tip backed up by data over at secondary trading platform EquityZen. That’s not crazy considering the company is valued at $2 billion-ish. Seed investors should take some money off the table once a company reaches that valuation.

We’ve heard that David Sacks at Craft Ventures hasn’t sold a single Bird share. We hear Tusk Ventures hasn’t sold, either. That leaves a few others, including Goldcrest Capital, which was the lone seed investor, and then Series A participants Lead Edge Capital, M13, and Valor Equity Partners.

Got a tip or overheard something in the world of transportation? Email me or send a direct message to @kirstenkorosec.

While you’re over at Twitter, check out this cheeky account @SDElevator. We can’t guarantee how much of the content is actually “overheard” and how much is manufactured for the laughs, but it’s a fun account to peruse from time to time.

Another new entrant to the mobility parody genre is @HeardinMobilty.


Deal of the week

There’s so much to choose from this week, but Aurora’s more than $530 million Series B funding round announced Thursday morning is the winner.

The upshot? It’s not just that Aurora is now valued at more than $2.5 billion. The primary investors in the round — Sequoia as lead and “significant” investments from Amazon and T. Rowe Price — suggests Aurora’s full self-driving stack is headed for other uses beyond shuttling people around in autonomous vehicles. Perhaps delivery is next.

And believe it or not, the type of investor in this round tells me that we can expect another capital raise. Yes, Aurora has lots of runway now as well as three publicly named customers. But investors like Sequoia, which led the round and whose partner Carl Eschenbach is joining Aurora’s board, T. Rowe Price and Amazon along with repeaters like Index Ventures (general partner Mike Volpi is also on the board) have patience, access to cash and long-term strategic thinking. Expect more from them.

Other deals that got our attention this week:


Snapshot

Speaking of deals and Tesla … the automaker’s $218 million acquisition this month of Maxwell Technologies got me thinking about companies it has targeted in the past.

So, we went ahead and built a handy chart to provide a snapshot view of some of Tesla’s noteworthy acquisitions. tesla-acquisitions-chart1

One note: Tesla CEO Elon Musk tweeted in 2018 that the company had acquired trucking carrier companies to help improve its delivery logistics. We’ve dug in and have yet to land on the company, or companies, Tesla acquired.

The deals that got away are just as interesting. That list includes a reported $325 million offer to buy Simbol Materials, the startup that was extracting small amounts of lithium near the Salton Sea east of San Diego.


Tiny but mighty mobility

Between Lime’s $310 million Series D round and the seemingly never-ending battle to operate electric scooters in San Francisco, it’s clear that micro mobility is not so micro.

Lime, a shared electric scooter and bikeshare startup, has now raised north of $800 million in total funding, surpassing key competitor Bird’s total funding of $415 million. Thanks to this week’s round of funding, Lime’s micromobility business is now worth $2.4 billion.

Lime currently operates its bikes and scooters in more than 100 cities worldwide. Over in San Francisco, however, Lime has yet to deploy any of its modes of transportation. Since last March, there’s been an ongoing battle among scooter operators to deploy their services in the city. The city ultimately selected Skip and Scoot for the pilot programs, leaving the likes of Lime, Uber’s JUMP and Spin to appeal the decision.

A neutral hearing officer has since determined SF’s process for determining scooter operators was fair, but the silver lining for the likes of JUMP, Spin and most likely, Lime, is that the city may open up its pilot program to allow additional operators beginning in April.


Notable reads

Two recent studies got my attention.

The first is from Bike Pittsburgh, an advocacy group and partner of Uber, that published the findings from its latest AV survey based on responses from local residents. The last time they conducted a similar survey was in 2017.

The takeaway: people there, who are among the most exposed to autonomous vehicles due to all the AV testing on public roads, are getting used to it. A bit more than 48 percent of respondents said they approve of public AV testing in Pittsburgh, down slightly from 49 percent approval rating in 2017. 

  • 21.21% somewhat approve
  • 11.62% neutral
  • 10.73% somewhat disapprove
  • 8.73% disapprove

One standout result was surrounding responses about the fatal accident in Tempe, Arizona involving a self-driving Uber that struck and killed pedestrian Elaine Herzberg in March 2018. Survey participants were asked “As a pedestrian or a bicyclist how did this change event and it’s outcome change your opinion about sharing the road with AVs?”

Some 60 percent of respondents claimed no change in their opinion, with another 37 percent claiming that it negatively changed their opinion. Nearly 3 percent claimed their opinion changed positively toward the technology.

Bike Pittsburgh noted that the survey elicited passionate open-ended responses. 

“The incident did not turn too many people off of AV technology in general,” according to Bike Pittsburgh. “Rather it did lead to a growing distrust of the companies themselves, specifically with Uber and how they handled the fatality.”

The other study, Securing the Modern Vehicle: A Study of Automotive Industry Cybersecurity Practices, was released by Synopsys, Inc.and SAE International.

The results, based on a survey of global automotive manufacturers and suppliers conducted by Ponemon Institute, doesn’t assuage my concerns. If anything, it puts me on alert.

  • 84% of automotive professionals have concerns that their organizations’ cybersecurity practices are not keeping pace with evolving technologies
  • 30% of organizations don’t have an established cybersecurity program or team
  • 63% test less than half of the automotive technology they develop for security vulnerabilities.

Testing and deployments

Pilots, pilots everywhere. A couple of interesting mobility pilots and deployments stand out.

Optimus Ride, the Boston-based MIT spinoff, has made a deal with Brookfield Properties to provide rides in its small self-driving vehicles at Halley Rise – a new $1.4 billion mixed-use development in Virginia. 

This is an example of where we see self-driving vehicles headed — for now. Small deployments that are narrowly focused in geography with a predictable customer base are the emerging trend of 2019. Expect more of them.

And there’s a reason why, these are the kinds of pilots that will deliver the data needed to improve their technology, as well as test out business models —gotta figure out how to money with AVs eventually — hone in fleet operational efficiency, placate existing investors while attracting new ones, and recruit talent.

Another deployment in the more conventional ride-hailing side of mobility is with Beat, the startup that has focused its efforts on Latin America.

Beat was founded by Nikos Drandakis in 2011 initially as Taxibeat. The startup acquired by Daimler’s mytaxi in February 2017 and Drandakis still runs the show. The company was focused on Europe but shifted to Latin America, and it’s made all the difference. (Beat is still available in Athens, Greece.) Beat has launched in Lima, Peru, Santiago, Chile and Bogota, Colombia and now boasts 200,000 registered drivers. 

Now it’s moving into Mexico, where more competitors exist. The company just started registering and screening drivers in Mexico City as it prepares to offer rides for passengers this month. 

TechCrunch spoke at length with Drandakis. Look out for a deeper dive soon.

Until next week, nos vemos.

First China, now Starbucks gets an ambitious VC-funded rival in Indonesia

Asia’s venture capital-backed startups are gunning for Starbucks . In China, the U.S. coffee giant is being pushed by Luckin Coffee, a $2.2 billion challenger surfing China’s on-demand wave, and on the real estate side, where WeWork China has just unveiled an on-demand product that could tempt people who go to Starbucks to kill time or […]

Asia’s venture capital-backed startups are gunning for Starbucks .

In China, the U.S. coffee giant is being pushed by Luckin Coffee, a $2.2 billion challenger surfing China’s on-demand wave, and on the real estate side, where WeWork China has just unveiled an on-demand product that could tempt people who go to Starbucks to kill time or work.

That trend is picking up in Indonesia, the world’s fourth largest country and Southeast Asia’s largest economy, where an on-demand challenger named Fore Coffee has fuelled up for a fight after it raised $8.5 million.

Fore was started in August 2018 when associates at East Ventures, a prolific early-stage investor in Indonesia, decided to test how robust the country’s new digital infrastructure can be. That means it taps into unicorn companies like Grab, Go-Jek and Tokopedia and their army of scooter-based delivery people to get a hot brew out to customers. Incidentally, the name ‘Fore’ comes from ‘forest’ — “we aim to grow fast, strong, tall and bring life to our surrounding” — rather than in front of… or a shout heard on the golf course.

The company has adopted a similar hybrid approach to Luckin, and Starbucks thanks to its alliance with Alibaba. Fore operates 15 outlets in Jakarta, which range from ‘grab and go’ kiosks for workers in a hurry, to shops with space to sit and delivery-only locations, Fore co-founder Elisa Suteja told TechCrunch. On the digital side, it offers its own app (delivery is handled via Tokopedia’s Go-Send service) and is available via Go-Jek and Grab’s apps.

So far, Fore has jumped to 100,000 deliveries per month and its app is top of the F&B category for iOS and Android in Indonesia — ahead of Starbucks, McDonald’s and Pizza Hut .

It’s early times for the venture — which is not a touch on Starbuck’s $85 billion business; it does break out figures for Indonesia — but it is a sign of where consumption is moving to Indonesia, which has become a coveted beachhead for global companies, and especially Chinese, moving into Southeast Asia. Chinese trio Tencent, Alibaba and JD.com and Singapore’s Grab are among the outsiders who have each spent hundreds of millions to build or invest in services that tap growing internet access among Indonesia’s population of over 260 million.

There’s a lot at stake. A recent Google-Temasek report forecast that Indonesia alone will account for over 40 percent of Southeast Asia’s digital economy by 2025, which is predicted to triple to reach $240 billion.

As one founder recently told TechCrunch anonymously: “There is no such thing as winning Southeast Asia but losing Indonesia. The number one priority for any Southeast Asian business must be to win Indonesia.”

Forecasts from a recent Google-Temasek report suggest that Indonesia is the key market in Southeast Asia

This new money comes from East Ventures — which incubated the project — SMDV, Pavilion Capital, Agaeti Venture Capital and Insignia Ventures Partners with participation from undisclosed angel backers. The plan is to continue to invest in growing the business.

“Fore is our model for ‘super-SME’ — SME done right in leveraging technology and digital ecosystem,” Willson Cuaca, a managing partner at East Ventures, said in a statement.

There’s clearly a long way to go before Fore reaches the size of Luckin, which has said it lost 850 million yuan, or $124 million, inside the first nine months in 2018.

The Chinese coffee challenger recently declared that money is no object for its strategy to dethrone Starbucks. The U.S. firm is currently the largest player in China’s coffee market, with 3,300 stores as of last May and a goal of topping 6,000 outlets by 2022, but Luckin said it will more than double its locations to more than 4,500 by the end of this year.

By comparison, Indonesia’s coffee battle is only just getting started.

Go-Jek confirms first close of $2B Series F round at $9.5B valuation

Go-Jek, the Indonesia-based ride-hailing company that is challenging Grab in Southeast Asia, has announced the first close of its Series F round, as TechCrunch reported last week. The company isn’t revealing numbers but sources previously told us it has closed around $920 million. Go-Jek is planning to raise $2 billion for the round, as reported last […]

Go-Jek, the Indonesia-based ride-hailing company that is challenging Grab in Southeast Asia, has announced the first close of its Series F round, as TechCrunch reported last week. The company isn’t revealing numbers but sources previously told us it has closed around $920 million. Go-Jek is planning to raise $2 billion for the round, as reported last year.

Go-Jek said that the first close is led by existing backers Google, JD.com, and Tencent, with participation from Mitsubishi Corporation and Provident Capital. It didn’t provide a valuation but sources told us that week that it is around $9.5 billion.

Starting out with motorbike taxis in 2015, Go-Jek has since expanded to taxis, private car and more. The company said it plans to spend the money deepening its business in Indonesia, its home market, and growing its presence in new market expansions Vietnam, Singapore and Thailand. It is also working to enter the Philippines, where it had a request for an operating license rejected although it did complete a local acquisition after buying fintech startup Coins.ph.

The Go-Jek business in Indonesia includes transportation, food delivery, services on demand, payments and financial services. That’s very much the blueprint for its expansion markets, all of which are in different stages. Go-Viet, its Vietnamese service, offers food delivery and motorbike taxis, Get in Thailand operates motorbike taxis and in Singapore Go-Jek provides four-wheeled car options.

Combined those efforts cover 204 cities, two million drivers and 400,000 merchants, the company said, but the majority of that is in Indonesia.

Grab, meanwhile, became the top dog after buying Uber’s local business, and it operates in eight countries. It recently crossed three billion rides to date and claims 130 million downloads. Grab said revenue for 2018 was $1 billion, it expects that to double this year. It has raised $6.8 billion from investors, according to Crunchbase, and its current Series H round could reach $5 billion.

Go-Jek claims it has 130 million downloads — despite just being in three markets — while it said it reached an annualized transaction volume of two billion in 2018 and $6.7 billion in annualized GMV. Those figures require some explaining as Go-Jek is being a little creative with its efforts to compete with Grab on paper.

Transactions don’t mean revenue — a transaction could be a $1 motorbike ride or a payment via QR code — and GMV is not revenue either, while both are ‘annualized’ which means they are scaled up after measuring a short period. In other words, don’t take these figures too literally, they aren’t comparable to Grab.

Grab raises $200M from Thailand-based retail conglomerate Central Group

Grab’s fundraising push continues unabated after the Southeast Asian ride-hailing firm announced that it has raised $200 million from Central Group, a retail conglomerate based in Thailand. Central’s business covers restaurants, hotels and more than 30 malls in Thailand, while it has operations in markets that include Vietnam and Indonesia. Its public-listed holding companies alone are worth more […]

Grab’s fundraising push continues unabated after the Southeast Asian ride-hailing firm announced that it has raised $200 million from Central Group, a retail conglomerate based in Thailand.

Central’s business covers restaurants, hotels and more than 30 malls in Thailand, while it has operations in markets that include Vietnam and Indonesia. Its public-listed holding companies alone are worth more than $15 billion.

Singapore-based Grab confirmed that this deal is not part of its ongoing Series H fundraising, but is instead an investment into its Thailand-based business. Rumors of the deal were first reported by Reuters last year.

Following this investment, Central said it will work with Grab in a number of areas in Thailand, including bringing its restaurants into the Grab Food service, adding Grab transportation to its physical outlets and bringing Grab’s logistics service into its businesses.

The investment represents the first time an investor has bought into a local Grab country unit, and the goal is to strengthen Grab’s position in Thailand — a market with 70 million consumers and Southeast Asia’s second-largest economy. Grab is under threat from Go-Jek, which expanded to Thailand at the end of 2018. While Go-Jek’s ‘Get’ service is currently limited to motorbikes on-demand in Thailand, its ambition is to recreate its Indonesia-based business that covers four-wheeled cars, mobile payments, on-demand services and more.

Central is a huge presence in the country, and in recent years it has raised its efforts to translate that offline retail presence into the digital space. Past deals have included the acquisition of Rocket Internet’s Zalora fashion business in 2016, and — more recently — a $500 million joint venture with Chinese e-commerce firm JD.com to create online retail and fintech businesses in Thailand.

Grab, meanwhile, is pushing on with its $3 billion Series H funding round. That deal is anchored by a $1 billion investment from Toyota but it also includes contributions from the likes of Microsoft, Booking Holdings and Yamaha Motors. More capital is waiting in the wings, however, with existing investor SoftBank in the process of transferring its investment to its Vision Fund with a view to investing a further $1.5 billion. The total fundraising effort is targeted at a lofty goal of $5 billion, sources told TechCrunch.

To date, Grab has raised $6.8 billion from investors, according to data from Crunchbase. That makes it Southeast Asia’s most capitalized tech startup and it was most recently valued at $11 billion. The company recently announced it has completed three billion rides; it claims 130 million downloads across its eight markets.

Go-Jek, meanwhile, closed the first portion of a $2 billion funding round last week, sources told TechCrunch. The new financing is aimed at growing out its presence in new market expansions which, beyond Thailand, include Singapore, Vietnam and the Philippines.

Southeast Asia’s Grab is adding Netflix-like video streaming to its ride-hailing app

Grab is Southeast Asia’s top ride-hailing firm thanks to its acquisition of Uber’s local business last year. Its biggest competitor gone, the company is on a push to go beyond transport and become an everyday ‘super app’ and that strategy just embraced video streaming today. That’s because Grab is integrating video-on-demand service HOOQ — a […]

Grab is Southeast Asia’s top ride-hailing firm thanks to its acquisition of Uber’s local business last year. Its biggest competitor gone, the company is on a push to go beyond transport and become an everyday ‘super app’ and that strategy just embraced video streaming today.

That’s because Grab is integrating video-on-demand service HOOQ — a local equivalent to Netflix — into its core ride-hailing app. The company, which is valued at $11 billion and raising a $5 billion round, already offers a range of services including food deliveries, payments, grocery delivery, travel deals and more. But, beyond utility, the focus is now shifting to entertainment, a category where Grab’s app currently sports only basic games.

Grab’s focus on these additional non-transportation services is designed to retain the attention of users and keep them engaged with its app even when they don’t need a ride. In that spirit, Grab announced a partnership platform last summer that’s aimed at helping companies in adjacent industries where it sees a fit to be integrated into its app. The benefit is potential access to Grab’s 130 million registered users which, aside from Western services like Facebook and Google, represents one of the largest digital platforms in Southeast Asia, where Grab is present in eight countries.

The rollout of HOOQ began earlier this month with Indonesia, Southeast Asia’s largest economy and the world’s fourth most populous country, the key focus initially.

The HOOQ ‘mini app’ doesn’t require a log-in, but existing HOOQ users can sign-in.

The companies didn’t disclose financial details, but HOOQ CEO Peter Bithos suggested Grab would receive a cut of revenue generated by subscription sign-ups generated by its app.

Leaning on Grab’s presence is certainly the appeal for HOOQ, which was started in 2015 by Singapore telco Singtel, Sony Pictures and Warner Brothers. Initially, a play to out-localize Netflix in Southeast Asia, HOOQ has recast its position somewhat in recent times — that’s included a free, advertising-supported tier launched last year and content deals with other on-demand services, including Hotstar in India.

Bithos, the HOOQ CEO, told TechCrunch that he believes Grab can support its growth and pivot from a cheaper but all-subscriber Netflix challenger to a freemium service that requires scale.

“Our strategy is around finding digital partners where we are complementary,” he explained in an interview. “We are building our tech and partnerships so that customers can easily bump into us without having to download an app or sign up to a different service.”

The HOOQ presence in Grab will include its full content library, Bithos confirmed.

“The deal is part of a much broader strategy for us,” he added. “We’re inverting the customer experience and putting HOOQ into other people’s products.”

Video in ride-hailing apps may sound unique but Go-Jek, Grab’s arch-rival headquartered in Indonesia, last year waded into video content, both through partnerships and its own productions. Even Uber has flirted with “in-ride content” to engage users, but it hasn’t delved into video yet.

With Go-Jek making the leap, it figures that Grab has followed with its own solution. Bithos said he is confident that the HOOQ-Grab tie-in is superior.

“Go-Jek hasn’t been able to get to anything like the scale or reach that we’ve got,” he said.

He suggested that the partnership allows Grab to focus on what it does best — rides — rather than other areas; that’s a concern that some sections of Grab’s user base have raised with its foray into other services.

“They don’t have to build video tech or focus on it,” he explained.

The end of China’s ride-sharing gig

Over the last few years, millions of Chinese workers managed to earn extra money by being ride-hailing drivers. Many picked the gig because of its flexible schedule. For those who could not otherwise afford to own a car in China’s pricy metropolises, driving around is also a status symbol, even if they are paying off […]

Over the last few years, millions of Chinese workers managed to earn extra money by being ride-hailing drivers. Many picked the gig because of its flexible schedule. For those who could not otherwise afford to own a car in China’s pricy metropolises, driving around is also a status symbol, even if they are paying off car loans every month.

Most drivers on Didi Chuxing — the startup that captured 90 percent of China’s e-hailing trips in 2017 per consulting firm Bain & Company — were part-time. That’s according to a report Didi put out in October 2017, which said half of its drivers worked less than two hours a day.

The report also hailed Didi as the epitome of China’s “sharing economy,” something that Beijing has been keen to promote to spur economic growth. The all-encompassing term, which includes shared platforms from mobility to elderly care services, raked in $764 billion in 2017, shows a report by China’s Sharing Economy Research Center of the State Information Center.

But gig work in China’s fledgling ride-hailing industry is coming to an end as new regulations make part-time driving overly expensive.

No more gigs

On January 1, ride-hailing apps in China start banning drivers who operate without the required “double licenses”: one for drivers and another for the cars they steer. Municipal governments across the country have nuanced stipulations for what these certificates entail, but in general, the fresh rules aim to more closely vet drivers transporting passengers around.

To obtain the ride-hailing driver’s permit in certain cities, drivers must own a local hukou, the residency permit that controls where people can legally work. A lot of ride-hailing drivers don’t have an urban hukou as they are migrant workers from rural parts of China, so they immediately become ineligible for ride-hailing apps.

The car license, on the other hand, requires the vehicle to operate as a commercial one, bringing additional costs to drivers who must absorb the costs of car insurance and maintenance, and scrap their vehicle after 8 years.

didi chuxing

All ride-hailing vehicles in China must possess the required license (circled in red) to be on the roads starting January 1, 2019. Photo credit: TechCrunch

Under the new legal framework, drivers can still work as independent contractors. But in effect, the policy shift is driving out casual workers. “No part-time drivers want to register their private car as a commercial one because of the high costs that come with it,” a Shenzhen-based Didi driver tells TechCrunch. “Being part-time doesn’t pay the bills anymore.”

Didi’s dilemma

Like a lot of China’s nascent industries, ride-hailing took off quickly in part thanks to relatively lax government oversight at the start. The first set of industry laws took effect in 2016 when the country officially legalized apps like Uber, which was later acquired by its local competitor Didi. Since then Chinese authorities have gradually rolled out more rules and the strictest regulations, including the rollout of the double licenses, came following the deaths of two passengers who used Didi last year.

The new policies have put a squeeze on driver and car numbers. In the Tier 2 city of Nanjing alone, Didi claims to have weeded out more than 160,000 illegal vehicles, local media reported. The sharp decline in cars available on the roads inevitably leads to longer wait time and user frustration, and the $56 billion giant will need to think of ways to maintain a constant supply of drivers.

Didi took off on account of generous subsidies for both users and drivers, but its staggering loss — which is said to stand at $585 million in the first half of 2018 — means it may not be offering cash-heavy incentives in the near term. To retain labor, Didi is offering test prep for drivers. It’s also lowered the barriers to entry by letting drivers rent licensed cars it sources from car rental and automaker partners. A catchphrase started to pop up on Didi’s mobile app for drivers in December: “You supply the manpower, we provide the car.”

Aside from regulatory hurdles, Didi also faces new challengers like BMW and Volkswagen’s China partner SAIC Motor, traditional carmakers that are entering the ride-hailing scene.

“Didi has educated China about what is ride-hailing. If it doesn’t react swiftly to changing dynamics, the billions of yuan it’s burned through will suffer from low returns,” Dong Feng, founder of a Chinese car rental startup suggests to TechCrunch.

Alibaba-backed Hellobike bags new funds as it marches into ride-hailing

2018 has been a rough year for China’s bike-sharing giants. Alibaba-backed Ofo pulled out of dozens of international cities as it fought with a severe cash crunch. Tencent-backed Mobike puts a brake on expansion after it was sold to neighborhood services provider Meituan Dianping. But one newcomer is pedaling against the wind. Hellobike, currently the country’s […]

2018 has been a rough year for China’s bike-sharing giants. Alibaba-backed Ofo pulled out of dozens of international cities as it fought with a severe cash crunch. Tencent-backed Mobike puts a brake on expansion after it was sold to neighborhood services provider Meituan Dianping. But one newcomer is pedaling against the wind.

Hellobike, currently the country’s third-largest bike-sharing app according to Analysys data, announced this week that it raised “billions of yuan” ($1 = 6.88 yuan) in a new round. The company declined to reveal details on the funding amount and use of the proceeds when inquired by TechCrunch.

Leading the round were Ant Financial, the financial affiliate of Alibaba and maker behind digital wallet Alipay, and Primavera Capital, a Chinese investment firm that’s backed other mobility startups including electric automaker Xpeng and car trading platform Souche. The fledgling startup also got SoftBank interested in shelling out an investment, The Information reported in November. The fresh capital arrived about a year after it secured $350 million from investors including Ant Financial.

As China’s bicycle giants burn through billions of dollars to tout subsidized rides, they’ve gotten caught up in financial troubles. Ten months after Ofo raised $866 million, the startup is reportedly mulling bankruptcy. Meanwhile, Mobike is downsizing its fleet to “avoid an oversupply,” a Meituan executive recently said.

It’s interesting to note that while both Ofo and Hellobike fall under the Alibaba camp, they began with different geographic targets. By May, only 5 percent of Hellobike’s users were in China’s Tier 1 cities, while that ratio was over 30 percent for both Mobike and Ofo, a report by Trustdata shows.

This small-town strategy gives Hellobike an edge. As the bike-sharing markets in China’s major cities become crowded, operators began turning to lower-tier cities in 2017, a report from the China Academy of Information and Communications Technology points out.

The new contender is still dwarfed by its larger competitors in terms of user number. Ofo and Mobike command 43 million and 38 million unique monthly mobile installs, respectively, while Hellobike stands at 8 million, accroding to iResearch.

Hellobike’s ambition doesn’t stop at two-wheelers. In September, it rebranded its Chinese name to HelloTransTech to signify an extension into other transportation means. Aside from bikes, the startup also offers shared electric bikes, ride-hailing and carpooling, a category that became much contested following high-profile passenger murders on Didi Chuxing .

In May and August, two female customers were killed separately when they used the Hitch service on Didi, China’s biggest ride-hailing platform that took over Uber’s China business. The incidents sparked a huge public and regulatory backlash, forcing Didi to suspend its carpooling service up to this day. But this week, its newly minted rival Hellobike decides to forge ahead with a campaign to recruit carpooling drivers. Time will tell whether the latecomer can grapple with heightened security measures and fading customer confidence in riding with strangers.

Grab raises fundraising target to $5B as Southeast Asia’s ride-hailing war heats up

Southeast Asian ride-hailing firm Grab is aiming to start the new year with a bang and an awful load of bucks. The company, which acquired Uber’s local business earlier this year, is planning to raise as much as $5 billion from its ongoing Series H round, up from an original target of $3 billion, a source with […]

Southeast Asian ride-hailing firm Grab is aiming to start the new year with a bang and an awful load of bucks. The company, which acquired Uber’s local business earlier this year, is planning to raise as much as $5 billion from its ongoing Series H round, up from an original target of $3 billion, a source with knowledge of the plan told TechCrunch.

Grab declined to comment for this story.

That Series H round has been open since June. Already, it has seen participation from the likes of Toyota, Microsoft, Booking Holdings and Yamaha Motors who have pushed it close to the original $3 billion target. Prior to raising $150 million from Yamaha, Grab said the round stood at $2.7 billion. While it is true that the company first announced that it was “on track to raise over $3 billion by the end of 2018,” it is not public knowledge that it has set its sights as high as $5 billion.

A big part of that expansion is a planned investment from SoftBank’s Vision Fund which, as TechCrunch reported last week, is aiming to pump up to $1.5 billion into the business. Adding that to the $3 billion total appears to leave a further $500 million allocation for other investors to take up.

Grab is already the most capitalized startup in Southeast Asia’s history having raised around $6.8 billion to date from investors, according to data from Crunchbase. The company was last valued at $11 billion — when Toyota invested the initial $1 billion in this Series H six months ago — and it is unclear how much that valuation will increase when the round is completed.

The company is also one of the widest reaching consumer internet companies in Southeast Asia, a region of 650 million consumers. Grab claims over 130 million downloads and more than 2.5 billion completed rides to date, while it has expanded into fintech and it is going beyond ride-hailing app to offer Southeast Asia a ‘super app’ in the mold of Meituan in China. On the financial side, Grab is assumed to not yet be profitable. But it has said that it made $1 billion in revenue and that it projects that the figure will double in 2019.

Buying Uber’s business made it the dominant ride-sharing operator in the region — a position that saw it pay fines in Singapore and the Philippines — but Uber’s exit also saw Go-Jek, a rival in Indonesia, step up and expand its business into new markets. Go-Jek — which is backed by the likes of Tencent, Meituan and Google — entered Vietnam in August and it has recently launched in Thailand and Singapore as it bids to step into Uber’s shadow.

With Go-Jek aiming to raise $2 billion of its own, it certainly looks like Grab’s extension of its already-enormous Series H round is aimed at increasing its war chest as the competition intensifies in post-Uber Southeast Asia.