Google is backing investing in ride-hailing companies. The U.S. search firm and China’s Meituan-Dianping are among the tech giants set to invest in Go-Jek, the Indonesia-based rival to Grab and Uber, a source with knowledge of discussions told TechCrunch.
We understand a deal could be completed as soon as next week, though whether Go-Jek announces it is unclear since it has history of not disclosing new investments.
Reuters reports that round is worth $1.2 billion, and we’re hearing that is accurate but with a caveat. These new investors are part of a follow-on to an investment made last year, according to our source.
Funding rounds are often complicated and not as clean as they may appear once announced. In Go-Jek’s case, it secured investment from Chinese internet giant Tencent in March last year as an initial tranche of a planned $1.2 billion raise. Existing investors including KKR, Warburg Pincus, Sequoia Capital, Northstar Group, DST Global and NSI Ventures agreed to follow on and Chinese e-commerce firm JD.com joined later in the year, too, but an allocation was left open.
Now that is full and the round is complete with commitments from Google, Temasek and Meituan-Dianping. We don’t have confirmed numbers for those stakes but, as latecomers to the party, they are likely to be fairly small and strategic in nature.
We understand the investment gives Go-Jek a valuation that is a touch above the $3 billion that Tencent agreed to invest at last year.
Google declined to comment. Representatives from Go-Jek, Temasek and Meituan-Dianping did not respond to requests for comment.
Go-Jek previously raised $550 million in 2016 so this is a big jump, but the competition has also increased its rounds by significant multiples.
Singapore-based Grab has raised more than $4 billion to date, including a $2.5 billion round led by SoftBank and China’s Didi Chuxing at a $6 billion valuation. Uber remains the world’s highest funded private tech startup with over $20 billion from investors, including a recent cut-price valuation deal with SoftBank.
Interestingly, our source confirmed that Google itself is investing directly rather than its Google Ventures unit. Just one month ago, Google made its first direct investment in India when it backed concierge app Dunzo. That, combined with the Go-Jek investment, it shows an increased interest in India and Indonesia, two of the world’s most promising emerging markets for tech and consumer internet services, beyond the product work it is doing in both regions.
It also adds another wrinkle to the complicated relationship of ride-hailing companies worldwide. Google Ventures invested in Uber in 2013 and, after a legal suit caused the relationship to get frosty, it backed Lyft last year.
Meituan-Dianping, meanwhile, may not be well known in the west but it is another significant addition.
The company was formed through a merger between China’s top two local commerce platforms and is valued at $30 billion. Beyond providing a platform that lets physical retail stores tap the internet for business, it is aggressively moving into ride-sharing in China where it hopes to rival Didi thanks to a $4 billion investment that closed last year.
A foray into Southeast Asia through Go-Jek makes sense in that context, but Meituan-Dianping may also look to work with Go-Jek to expand its core service — known as offline-to-online — in Indonesia, which is the world’s fourth most populous country with over 250 million people.
Uber CEO Dara Khosrowshahi has said Southeast Asia is unprofitable, but the region — which is home to 600 million consumers — is tipped to see huge growth. Ride-hailing in the region is predicted to become a $20.1 billion per year industry by 2025 up from $5.1 billion in 2017, according to a report co-authored by Google. With Southeast Asia’s largest economy, Indonesia is likely to account for the majority of that — a prior 2015 Google-affiliated report pegging its share of revenue at more than 40 percent.
(You can’t accuse Google of not doing its homework.)
Go-Jek itself was founded in 2011 and it began to make a name for itself a few years ago through its core motorbike tax on-demand service. Bike taxis already exist in many of Southeast Asia’s largest cities where they are popular options for cutting through congested streets and getting from A to B faster than four wheels.
Go-Jek has since expanded to offer regular taxis, services and shopping on-demand and a mobile payment service, which is being pushed as an offline option too. Its core office is in Jakarta but it has an engineering presence in India. The company is widely thought to be ahead of Grab and Uber in Indonesia, which remains its only market.
Uber and Grab both offer similar motorbike taxi options in parts of Southeast Asia, while Grab has also ventured into the mobile payment space. Yesterday, it completed its second acquisition to boost its GrabPay service.
Featured Image: BAY ISMOYO/Getty Images
Published at Thu, 18 Jan 2018 07:11:16 +0000