Uber’s rivals in Asia gas up in the battle for customers
KONG (WSJ) – The arms race between Uber Technologies, Inc. and its rivals in Asia is heating up.
After selling its China operations to a local rival, Uber faces another expensive fight in the heavily populated market of Indonesia. Local rival Go-Jek is in the process of raising between $500 million and $1 billion in its latest funding round that could hang a roughly $2-billion "pre-money" valuation on the startup, according to people familiar with the situation.
A pre-money valuation refers to the value of the startup before fresh funds are included.
The fundraising comes after Grab, a ride-hailing competitor based in Singapore, pledged to invest $700 million in the Indonesian market.
The Southeast Asian ride-hailing market has become the latest hotly contested sector for venture-capitalbacked startups. The region is a potentially lucrative battleground with its ride-hailing market forecast to grow 18 percent annually to $13.1 billion by 2025 from $2.5 billion in 2015, according to a report by Alphabet, Inc.'s Google and Singapore state investment firm Temasek Holdings Pvt. Ltd. By contrast, growth in the US market is already slowing. Research firm eMarketer predicts that the number of people who use a ride-hailing service in the US will rise 7.2 percent in 2018, compared with an estimated 13 percent gain this year.
In terms of downloads in Southeast Asia, Grab and Go-Jek are ahead of Uber, according to data from San Francisco-based mobile-apps analytics firm Sensor Tower. In the fourth quarter, Grab's app was downloaded 6.7 million times in the region's six largest markets where it competes with Uber, compared with the US company's 5.3 million downloads. In Indonesia, GoJek had 147,000 more downloads than Uber in the same period.
Uber has already set up a foreign investment company in Indonesia and has a presence in Jakarta, Surabaya, Bandung, Yogyakarta and Bali. Uber has also added a two-wheeler hailing service called UberMoto and chauffeur-driven rental cars in Bali.
Indonesia is Grab's largest market by completed rides across all platforms, the company has said, without disclosing daily ridership. Its car and motorcycle-taxi hailing businesses each grew more than fivefold in the country last year from 2015, generating more than $260 million in income for drivers in the country, the company said.
Go-Jek has recently been seeking to raise funds in China, including from internet major Tencent Holdings Ltd., after a roadshow to pitch the startup to prospective investors there, according to the people familiar with the matter. The Information earlier reported that Tencent was in talks for an investment.
Go-Jek didn't immediately respond to a request for comment. Tencent declined to comment.
The new round of fundraising comes after Go-Jek raised $550 million from a clutch of investors including private-equity firms KKR & Co. and Warburg Pincus LLC in August.
Investors world-wide are pouring money into ride-hailing apps that are burning cash as they fund subsidies to attract drivers. Go-Jek offers inexpensive, on-demand motorcycle taxis that can be booked through smartphones. The company offers fixed prices and pickups, meaning passengers don't need to haggle over fares with drivers at motorbike stands. It has also expanded its offerings into payments and on-demand services including grocery shopping.