Uber rival GrabTaxi expects to break even this year
GrabTaxi Holdings Pte. expects to break even in 2016, just four years after its founding, as Southeast Asia's largest venture-backed startup broadens its ridebooking services to stay a step ahead of hard-charging Uber Technologies Inc.
The region's largest car- and taxi-hailing service is eschewing an initial public offering for the moment while it works on expanding a car-hire and motorcycle-taxi service straddling six countries into areas like carpooling, cofounder and chief executive officer Anthony Tan said in Singapore.
"Many parts of our business will actually be profitable this year," said Tan, a Harvard Business School graduate whose grandfather drove a taxi. "So this year for sure," the company will break even. While "an IPO is always an option, but for us, it's important to stay focused, execute and out-serve the customers."
GrabTaxi, founded by Tan and partner Tan Hooi Ling, raised $350 million in its latest round from investors including Coatue Management LLC, China Investment Corp., GGV Capital and Didi Kuaidi. It has raised more than $700 million to date from investors including Japan's SoftBank Corp. and Singapore's Vertex Venture Holdings, possibly pushing its valuation past the $1 billion "unicorn" mark. "Our investors are very long-term investors," he said. "To them, in the end, it's about how to build the greatest tech company out of Southeast Asia."
Tan wouldn't discuss GrabTaxi's valuation or operational statistics except to say average daily bookings have risen more than 10-fold from a year earlier.
On-demand car services have taken off around the world as mobile usage expands and riders seek simpler or quicker alternatives to taxis and public transportation. Yet Uber tends to lose money per ride though ridership is growing. On a November call with investors, acting chief financial officer Gautam Gupta said Uber is profitable in two of its biggest countries, though he wouldn't name them. The US rival is now encroaching on GrabTaxi's turf. Chief executive officer Travis Kalanick is spending aggressively to expand its global network and is making inroads into GrabTaxi's home markets, from Malaysia and Vietnam to Singapore. GrabTaxi, which will adopt the "Grab" brand henceforth, has more than 200,000 drivers around its home region.