Malaysia’s homegrown bike-hailing firm Dego Ride, which has recently roped in 7-Eleven (Malaysia Holdings) as its major shareholder, is in talks with private equity funds to raise $45 million this year for delivery services and technology expansion.
Dego Ride’s founder and chief executive officer Nabil Feisal Bamadhaj told DealStreetAsia that the firm is already in discussions with a slew of local and foreign PE funds and that the deal is expected to be finalised by the second or third quarter of this year.
“We are keen on exploring business opportunities with PE firms to see who we fit best,” said Nabil.
The proposed funding, he added, will be used to spruce up the expansion of delivery services with merchants and providers; building talent for the group’s technology hub in its primary market – Malaysia.
Earlier this month, the ride-hailing major made headlines when 7-Eleven Malaysia announced that it acquired a 46.45 per cent stake in Myinteractivelab Sdn Bhd for Rm 7.5 million ($1.8 million), the parent company of Dego Ride. Nabil holds the remaining stake in Myinteractivelab.
Nabil, who saw a significant synergy with 7-Eleven (starting from providing delivery services to Dego Ride customers), hopes to expand its partnership with other fast-moving consumer good firms.
“Although 7-Eleven is our equity partner, we are open to other retailers as we want to be a universal delivery service provider,” he said.
While the homegrown startup is considered a latecomer in the Southeast Asian region as compared to Singapore-based ride-sharing company Grab and Indonesian counterpart Gojek, Dego Ride was the first company to launch bike services in Malaysia way back in late 2016. However, its services were banned in 2017 as the former government declared the activity as illegal due to safety concerns.
“Providing the best service in terms of convenience, price and service quality to my riders and customers, is what we can do with the presence of other competitors,” said Nabil.
Since the six-month trial period of e-hailing bike services kicked off in Klang Valley (covering all major towns in Selangor and Kuala Lumpur), Malaysia on January 1, Dego Ride has attracted more than 4000 applicants.
“The numbers of registered riders and users are not bad and we hope that the momentum continues till the end of the year,” said Nabil.
The Malaysian government earlier gave a nod to Gojek to enter the country’s ride-hailing market. Grab, too, has kicked off its motorcycle e-hailing services in January following its success in Indonesia, Vietnam and Thailand.
Re-entering the market
“I would say the market is big enough for us. It is a little different from being banned in 2017. There is a slight increase in the numbers of vehicles and commuters in Klang valley this year,” said Nabil.
It was reported that Prasarana, a government-owned transport company, is handling daily ridership of 1.4 million through its public transport services across Malaysia last year.
For Nabil, his goal is in line with the Malaysian government to boost the number and uses of public transport in the country, while also providing income opportunity for approved riders.
Sustainability regulation: A key concern
The key concern for Nabil is not the competition with well-funded peers, but the sustainability of regulations.
“That’s everyone’s guess as safety is a paramount issue for us and yet we’re not able to be in full total control of this concern at all times. I am hopeful that Malaysia will be able to develop this sector with a modern approach based on the growth potential displayed in other ASEAN countries with a motorcycle taxi sector,” said Nabil.
However, he also highlighted the significant changes that he has witnessed under the Pakatan Harapan government. For instance, every related government agency is involved in the motorcycle taxi trial programme, and the government has also engaged with industry players to execute its plan.
“The government and its various ministries have a number of initiatives that correlate with motorcycle safety, which have been put into action and many more are underway,” he said.
However, there are certain issues that need to be addressed in terms of the trip safety, such as helmet, speed of travel, gender-specific transport, age of the bike, among others. Only when these issues are tackled, the services will be more viable in Malaysia, and the demand will be more sustainable in the long-term.