Ride-hailing giant Didi Chuxing raised more than $5.5 billion from investors, scoring the single largest round of funding on record to bankroll an expansion beyond China and into driver-less technology.
Didi disclosed the financing in an emailed statement but not the backers who joined this round. People familiar with the matter said this week that the investors would include SoftBank Group Corp., Silver Lake Kraftwerk, China Merchants Bank Co. and an arm of Bank of Communications Co. The round was said to have raised the four-year-old startup’s valuation to about $50 billion, up from a previous $34 billion after its acquisition of Uber Technologies Inc.’s China business.
That price tag surpasses smartphone maker Xiaomi Corp.’s and makes Didi the world’s most valuable startup after Uber. The deal grants much-needed ammunition as Didi continues to fight Uber and Alphabet Inc. in automated driving. It also buys the company time to seek new revenue streams, after its most important source of income was hampered by more stringent Chinese regulations on driver qualifications.
Cities including Beijing and Shanghai have imposed stricter regulations that require drivers to be local residents, cutting out thousands from the countryside who had been willing to take chauffeur jobs to make a better living. Didi has won operating licenses in close to a dozen cities including Tianjin and Chengdu, affirming its right to legally operate in China.
The company hopes driver-less technology could help it overcome such hurdles in the future. Didi wants to take advantage of data on 400 million users across some 400 cities. It opened an artificial intelligence lab in Mountain View, California last month, called Didi Labs. It’s already lured dozens of stalwarts in the field including former Uber auto-security expert Charlie Miller, known for remotely hacking into a Jeep Cherokee in 2015.
Didi already counts more than 100 investors as backers including Tencent Holdings Ltd., Alibaba, Tiger Global Management and China’s sovereign wealth fund China Investment Corp. Its latest round exceeds the previous record for a single tech-industry funding set by Ant Financial, an Alibaba affiliate, in 2016, according to London-based researcher Preqin.