China’s DiDi to back small Uber rival

Company to invest in Estonian online taxi firm

Chinese ride-hailing company DiDi Chuxing is investing an undisclosed amount in Estonian online taxi firm Taxify to help it expand in Europe and Africa, where it has gained share in some cities against US player Uber.

DiDi Chuxing will invest in and collaborate with Taxify to support the latter’s further expansion across its regional markets, the two companies said in a joint statement on Tuesday.

DiDi and other increasingly well-funded competitors in the ridesharing business are seeking to grab share from Uber in regional markets around the globe, seeking to capitalize on the San Francisco-based firm’s recent, highly publicized woes.

Taxify said recently it had 2.5 million active passengers in around 25 cities and was gaining share against Uber in several markets in central and eastern Europe and, more recently, in Africa.

In January, Reuters reported that Didi is leading a group investing more than $100 million in Brazilian on-demand taxi and ride sharing company 99.

Under the terms of the investment, Didi will gain the rights to nominate a member of 99’s board of directors. In return, Didi will provide “strategic guidance and support.”

Since its founding 3-1/2 years ago, Taxify mostly has funded itself from operations, having only ever raised 2 million euros in outside financing from local venture capitalists and angel funders, Chief Executive Markus Villig told Reuters recently.

Uber operates in nearly 600 cities in 70 countries and reported it had fare revenues around $20 billion last year. It was Silicon Valley’s most valuable private firm when it was last valued at up to $68 billion.

Over the past year, however, Uber has faced regulatory setbacks, employee and driver protests and executive departures, leading to founder Travis Kalanick being pushed out by the company’s board in June.

DiDi is the world’s second most valuable venture-backed start-up after Uber, having last been valued at $50 billion according to venture investment tracking firm CB Insights, having raised $13 billion in funding over the past five years.

It counts 400 million customers in 400 cities in China. DiDi is backed by Chinese Internet giants Alibaba and Tencent and Japan’s SoftBank Group, among others. DiDi acquired Uber’s China business a year ago, leaving the US online taxi pioneer with a minor stake in DiDi.

Reuters reported in May that SoftBank Group Corp has agreed to invest $5 billion in Didi.

Didi said in April that it raised more than $5.5 billion to expand its business overseas and develop artificial intelligence technology.

SoftBank is trying to transform itself into the “Berkshire Hathaway of the tech industry” with the planned launch of a $100 billion technology fund as telecoms services markets mature.

It has already announced plans to invest at least $25 billion over the next five years in the fund, which would be one of the world’s largest private equity investors.

Analysts expect debt-heavy SoftBank to transfer some of its existing investments to the fund to meet that commitment.

Uber also faces well-funded competition from rivals Lyft in the United States, Ola in India and Grab in Southeast Asia.

Last week, DiDi and SoftBank said they would contribute much of a new $2.5 billion investment into Grab, valuing the Singapore-based firm at around $6 billion.

Uber ceded control of its business in Russia and five nearby markets in July by agreeing to join forces with larger regional internet player Yandex, leaving the Russian company in control of the combined operation.