Global Politics, US, VR World

With $65M Series C, GrabTaxi Eyes Asia’s Top Taxi App Spot

The market for transport apps is heating up around the globe. For one, startups like Lyft and Uber are battling each other for both drivers and customers in US and European markets. In some jurisdictions, transport startups are being targeted by regulators and franchise-granting bodies for not complying with local rules. In yet some, highly protectionist taxi companies are feeling the crowding-out effect from convenient and cheap black car services.

In Asia, there are essentially two types of transport app services. One involves companies like Uber, which offers unmarked black car services either from established car rental companies or qualifying private owners (through UberX). The other involves conventional taxi cabs that you can flag down through a smartphone app. Major players in the region include Rocket Internet’s EasyTaxi, as well as Malaysian GrabTaxi, which has started expanding to other countries like the Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Earlier this week, the GrabTaxi Group — known in Malaysia as MyTeksi — announced that it has raised a third major financing round, with $65 million led by US venture capital firm Tiger Global Manage, along with GGV Capital, Vertex Venture Holdings and Qunar, which had previously joined earlier funding rounds. For this series C, Hillhouse Capital Management also joined in as a new investor.

According to Adelene Foo, MyTeksi general manager, this brings the company’s total capitalization to $90 million within the past 12 months, with the startup’s previous investment rounds totalling about $25 million. She says the new investment is meant to further improve its technology and customer service, as well as aid in the company’s planned expansion into other markets. “With this funding, we hope to further establish our footprint in the existing markets that we are operating in,” she said in a press briefing in Malaysia.

In a media briefing in Singapore, GrabTaxi founder and CEO Anthony Tan says that the “smartphone is the new rice bowl,” referring to how mobile technologies are contributing greatly to productivity, business growth and even job creation in the region. He cites how taxi drivers in the company’s coverage areas have turned to mobile apps to help increase the number of fares they make in a day.

GrabTaxi has reported 2.1 million downloads with 400,000 active users across different mobile platforms. According to Tan, the GrabTaxi apps for Android and iOS generate about two bookings per second or about 5.1 million rides per month throughout the 16 Southeast Asian cities it operates in. The company has about 25,000 taxi drives in its network, who get an average of seven rides per day through the app. Taking the standard Malaysian per-ride commission of $0.64, this means a revenue of about $37 million per month.

Apart from partnering with taxi companies and operators for mobile-based booking, the company has also entered into black-car booking service through GrabCar in some markets like Manila, Kuala Lumpur and Singapore. The service targets the more upscale market and follows a similar surge-pricing model that Uber users are familiar with.

Challenges Ahead

Competition is fierce in this space, with participants willing to do cutthroat pricing in order to gain traction and increase their foothold on the market. In western markets, for instance, one might hear about how transport startups Uber and Lyft pirate each other’s drivers and offer cash incentives for switching. In Southeast Asia, e-hailing apps like EasyTaxi have even gone as far as drop their booking fees altogether, in order to attract customers. Meanwhile, GrabTaxi itself has provided customers free rides through its cartoon character-inspired cars in certain markets. GrabTaxi had also earlier entered into partnerships with telecom companies in the region to offer carrier billing for both taxi rides and driver commission fees.

The challenges go beyond market-related concerns, however. There are also regulatory and franchise-related issues that some startups face. In the Philippines, for example, the country’s Land Transportation Franchise and Regulatory Board has sought dialogue with transport startups regarding the legal implications of car hire booking apps like Uber and even GrabCar. Given that the country requires for-hire vehicles to have a franchise in order to operate, companies that use smartphone apps to book rides from non-public vehicles might be facing some legal impediment.

In this regard, the companies’ standard responses are that they are not public utility transport companies, but rather technology companies that only facilitate rides through their platform. This phenomenon is characterized by entrepreneurs and developers as technology fast outpacing laws.