Masayoshi Son’s Softbank is reportedly in talks to invest $2 billion in Grab, the leading ride-sharing and transport app in Southeast Asia. Softbank has a prior investment in the company, having already put in $250 million in 2014. The additional $2 billion capital infusion forms part of their $93-billion Vision Fund which is based on a valuation of $5 billion for Grab-the biggest valuation for a startup in Southeast Asia.
Earlier reports said venture capitalists are intentionally investing in Uber’s rivals in different regions to prevent it from completely dominating the market.
Son’s 40% stake is one of the largest venture capital infusions for a startup in the region. The tech mogul is known for investing the equivalent of 20% to 40% of a company’s valuation. Softbank is supporting ride-sharing apps in the region especially after the success of Uber in the United States. The company foresees a huge market expansion in Southeast Asia, especially in China, where they also have a stake in Didi Chuxing, another ride-sharing app with a user base of about 400 million people.
Grab currently operates in 39 cities across six countries. With more than 36 million downloads, there is still a lot of room to grow, as the region has more than 630 million in population and between 150 million to 200 million cell phones. The market for ride-sharing in Southeast Asia is expected to grow from $2.5 billion in 2015, to $13.1 billion in ten years.
In Southeast Asia Grab has more than 710,000 drivers for their services, which includes Grab Taxi, Grab Car, Grab Coach, and others. They have a wide range of transport options which include cars, taxis, motorcycles, shuttle vans and buses.
The Battle is On; Grab, Uber, Or an Unknown?
On the other hand, their closest competitor, Uber, is also operating in Southeast Asia, competing with local ride-sharing apps. Earlier reports said venture capitalists are intentionally investing in Uber’s rivals in different regions to prevent it from completely dominating the market.
Grab’s expansion plan includes cross-interoperability with other ride-sharing companies, like India’s Ola, China’s Didi Chuxing, and Lyft. The company has also been aggressive in offering other ride-sharing and transport-related services. It recently launched GrabCoach for corporate and group customers. This service uses buses and minivans for transporting large groups of people from 13 to 40 passengers at a time.
They also have delivery services (door-to-door courier services) in some areas. Among other things, Grab is also heavily into cashless payment and they are developing an app where transaction services like PayPal, and credit cards can be integrated into one.
Grab has also extended its reach, opening in Yangon, the capital of Myanmar. It has likewise expanded services in Indonesia, with an investment of $700 million in ecommerce startup Kudo. The amount will be used to widen the reach of their digital wallet allowing for cashless transactions, not only for Kudo, but also for Grab in Indonesia.
Grab recently opened additional research and engineering sites in Asia. The new engineering centers will be in Bangalore, India, along with Ho Chi Minh City in Vietnam. They will also be opening another engineering center in Jakarta, Indonesia, which will raise the number of offices to six. They already have offices in Beijing, and in Seattle, WA, as well as their headquarters in Singapore.
With the investment resources of Softbank, Grab may well set the standard for ride hailing and courier services worldwide. In addition, Son’s investments in basic research may give these companies a technology edge over time. Asia is coming on strong with new services in all industries and bold new ways of getting the job done.