Grab raised $750 million from investors including Japan’s SoftBank Group Corp., giving it a war chest to fight Uber in promising markets such as Indonesia now that the U.S. company has ceded China to Didi Chuxing. Grab’s fundraising was the largest-ever for a Southeast Asian consumer technology company and increased its valuation to more than $3 billion, according to a person familiar with the matter.
The funding turns up the heat on Uber, which agreed to sell its Chinese operations to rival Didi, ending a bruising battle that cost it billions. Grab Chief Executive Officer Anthony Tan said at the time he expected the U.S. company to pile more resources into relatively untapped Southeast Asia, a prophecy that has come true as it rolled out new services and features, from upfront pricing to food-delivery arm UberEATS in Singapore.
“While the Uber-Didi truce stopped the bleeding, the uncertainty now is the rest of Asia,” said Finian Tan, chairman of Vickers Venture Partners in Singapore. “Uber may double down in Southeast Asia and India, so competition is going to get tougher for Grab and Ola until another consolidation occurs.”
Grab turned to new as well as existing investors for its fundraising. Didi was said to be joining that round but Grab only mentioned SoftBank in its statement on Tuesday. It won’t be disclosing any other participants, the company said. The Asian startup, whose previous backers included Vertex Ventures and GGV Capital, was also said to have initially targeted as much as $1 billion.
Didi, Grab and India’s Ola form the vanguard of Asia’s burgeoning on-demand economy. Car-hailing has taken off as smartphone usage expands and riders seek simpler or quicker alternatives to taxis and public transportation. But the process of signing up drivers and attracting customers remains a costly one, requiring big subsidies on rides and constant marketing. Uber is arguably best-capitalized as the world’s largest technology startup, earning a $68 billion valuation.
Grab, Didi, Ola and Lyft Inc. formed a strategic alliance to fend off Uber. They’ve begun by hooking up their services, allowing users from their respective home countries to switch over to a partner’s network while traveling. Grab, which said it now operates as many as 1.5 million daily bookings across six countries, now plans to invest in mobile payments and sustain its pace of geographical and service expansion.
“Our vision is to drive Southeast Asia transportation forward and transform the region’s mobile internet ecosystem,” Tan said in a statement. “This latest funding strengthens our ability to pursue those long-term goals as we continue to build on our market leadership.”
Uber has gone after Grab’s major strongholds such as Indonesia and Singapore, trying to win over drivers and passengers with relentless marketing and discounting. And in India, Ola tries to stay one step ahead of its U.S. rival by expanding its coverage at a more rapid pace.