Southeast Asia’s ride-hailing major Grab has announced another round of major funding, raising $2 billion this time, it said in a statement today.
Besides Toyota Motor Corporation which pumped in $1 billion recently, other investors in the latest round include OppenheimerFunds, Ping An Capital, Mirae Asset’s Naver Asia Growth Fund, Cinda Sino-Rock Investment Management Company, All-Stars Investment, Vulcan Capital, Lightspeed Venture Partners, Macquarie Capital and others.
Grab emphasized that a significant portion of the funds raised will be used to sustain its investments in Indonesia, the home ground of rival Go-Jek. Since Uber’s exit from Southeast Asia, Grab has been in the race to further deepen its presence in the region by raising larger corpus from investors to take on Go-Jek, who had subsequently announced plans to move into four new markets in the region two months ago.
Go-Jek is certainly not letting Grab take the investors’ limelight. The startup is also said to be in talks to raise a $1.5 billion round to back its international expansion into Vietnam, Thailand, Singapore and the Philippines.
The success stories of Grab and Go-Jek have compelled global investors to look into Southeast Asia, a multicultural region with a relatively young 650 million population and booming internet penetration.
Co-founded by Anthony Tan and Tan Hooi Ling, Grab claims that it is on track to achieve $1 billion in revenue by end of this year – the first startup in Southeast Asia to achieve such a revenue record. It has also crossed its 2-billion rides milestone this June. Other significant announcements include the launch of Grab’s own venture arm Grab Ventures to invest in other tech startups.
Valuation of Grab remains an undisclosed topic, where Anthony Tan has always declined to comment the startup’s valuation, although reports had said Grab is valued at over $10 billion since its last financing round with Toyota. On plans for IPO, he said there is no immediate need for an IPO but “it’ll always be an option“.
Grab said that more than half of over 7.1 million micro-entrepreneurs on its platform resides in Indonesia. It also claimed that through its partnership with local wallet and rewards programme OVO, Grab has topped the consumers’ list to be the most widely accepted mobile payments ecosystem, having garnered more than 60 million downloads.
According to Gavin Lock, chief operating officer at Senjo Group, Grab’s success with GrabPay is a clear reflection of its success as a taxi service. But the challenge moving forward sustaining growth in its merchant and customer base to drive profits via their e-wallet service.
“Getting into online payments also means getting into the same space as those who have a much longer track record in delivering internet-enabled services such as ApplePay. These guys have equally as deep pockets, if not deeper, and a whole lot more experience in managing consumer activities on a mobile device,” said Lock.
Sticking to the Indonesia theme, Grab said its food delivery service, GrabFood, has expanded to 28 Indonesian cities, with its gross merchandise value almost quadrupling in 1H2018. Similarly, its courier delivery service GrabExpress’ GMV has more than doubled in the same period.
Part of the fresh funds will also be used to expand Grab’s online-to-offline (O2O) services across the region. The latest funding announcement comes right after the startup launched its open platform GrabPlatform and its foray into the grocery delivery space through GrabFresh – a partnership between Grab and HappyFresh.
According to Grab, GrabFresh has already rolled out its services in Jakarta, with other cities to follow later this year. This portal has first reported that Grab has picked up a minority stake in HappyFresh. The struggling grocery delivery startup had pulled out its operations in Taiwan and the Philippines to focus on sustainability.
Grab declined to comment on the acquisition.
Grab’s president Ming Maa said: “We are honoured to welcome these top-tier financial institutions into our roster of strategic investors and partners. Grab is today the industry-changing O2O platform that enables millions of consumers and entrepreneurs to come online and drive the digital economy in Southeast Asia. We have seen overwhelming interest from global strategic investors and partners who are keen to partner with us to capture the region’s booming growth.”
Reuters had on Wednesday reported that Grab was set to announce an additional $1 billion in funding. On the same day, Indonesia-based Go-Jek officially kicked off its operations in 12 districts across Ho Chi Minh City in Vietnam through local entity Go-Viet, marking its first international expansion since it was founded in 2010.
4 Questions with Ming Maa, President of Grab
Grab President Ming Maa said that the company’s vision is to become SE Asia’s leading everyday super app. Photo: Grab
1. What is Grab’s strategy for capturing Indonesia?
We will use our proceeds to continue to invest in Indonesia. We are the leading on-demand transportation company in Indonesia and our other verticals like GrabFood and GrabExpress are scaling rapidly.
2. What tangible targets is Grab setting for Indonesia this year?
We are launching GrabFresh, our demand grocery service in Jakarta soon and we plan to roll it out to more cities by the end of the year.
3. What competitive edge does Grab have over GoJek in Indonesia?
Our competitive edge in Indonesia is our agent network. We have a huge agent network of more than 3 million agents. These agents help us recruit drivers and bring people living in places with no Internet access, online. Because of our robust agent network, we went from 12 cities at the start of 2017 to 132 cities to date.
We don’t fixate on what our competition is doing, because we are too busy growing from strength to strength. That said, I do want to emphasise a few points:
i) Our investors: They are long-term and strategic in nature. They also have a history of picking winners. Currently, we are the best capitalised SEA startup. If you put two and two together, I think that speaks for itself as to how we are regarded by investors versus our competitors.
ii) We put our money where our mouth is: We fundraise to execute our vision, hit our goals and that in turns brings in more interest from investors. Unlike our competitors, we don’t talk about fundraising. We are focused on execution and making our goals a reality.
4. Which sectors or markets is Grab eyeing in the near to medium term?
We recently announced our vision to become SEA’s leading everyday super app. Grab will use our newly invested funds to expand the range of O2O services (GrabFood, GrabExpress, Grab Financial) it provides in Southeast Asia and to strengthen its position as the top everyday app for millions in the region.