Posted on Friday, Dec 8th 2017
According to a study conducted by Google, the South East Asian taxi on-demand service is projected to grow from 18% annually over the next nine years to be a $13 billion industry by the year 2025. The number of monthly riders using these services is expected to grow from 7.3 million in 2016 to 29 million by 2025. Singapore-based Grab, also known as GrabTaxi, is riding high on this growth to become the most valuable Billion Dollar Unicorn story from Southeast Asia.
Grab was founded in 2012 by Harvard students Tan Hooi Ling and Anthony Tan. It initially began operations in Malaysia in the form of an app called My Teksi that was adopted by a small fleet of 30 taxis in Malaysia. Today, Grab operates in 65 cities across in Malaysia, Singapore, Indonesia, Thailand, Vietnam, Myanmar, and Philippines. It has added additional services to its portfolio including a car pooling service GrabHitch, private car service GrabCar, motorcycle hailing service GrabBike, delivery service GrabExpress, and bus services GrabCoach, GrabShuttle, and GrabShuttle Bus.
Grab has recorded more than 50 million downloads from users and has over 1.1 million drivers on its platform. Grab claims that it currently holds 95% market share in southeast Asia for third-party taxi-hailing and 71% percent in private vehicle hailing, with nearly 3 million daily rides.
Grab earns revenues in the form of commissions on booking fees for each ride. The commission rate varies based on the distance of the trip, the location, and time of day. Reports estimate Grab’s revenues at $80-$95 million per year, with a $100 million net loss. Grab claims that it is profitable in certain verticals and cities.
It has raised $4.1 billion so far in ten rounds of funding from investors including Didi Chuxing, Emtek Group, Tokyo Century, Softbank , GGV Capital, Tiger Global Management, and the Singapore government’s Vertex Venture Holdings. Its latest round of funding was held in July this year when it raised $2.5 billion in a round led by Didi Chuxing and SoftBank Capital at a valuation of over $6 billion. An earlier round held in September 2016 had valued Grab at $3 billion.
Grab’s Expanding Offerings
Last year, Grab also began to expand its services within the digital payments segment. It began work on GrabPay, which is a payments platform with a focus on the Indonesian market. The cashless digital wallet resides within the Grab app and allows users to pay not only for their Grab rides, but for other services as well. Earlier this year, Grab announced the acquisition of Kudo, an Indonesia-based mobile payments startup. Kudo is focused on the Indonesian population that does not have a credit card, access to a bank account, or even regular Internet access. It allows these users to make online purchases through point-of-sale kiosks located in public areas. Terms of the acquisition were not disclosed, but analysts peg the deal between $80-$100 million.
Uber has been trying to make inroads into the region by offering discounted rides and promotional fares. Then, there are local vendors such as Go Jek that offers ojek or motorcycle rides on a similar business model. But Grab’s wider reach, coupled with enhanced service such as in-app messaging service that even translates languages, has been helpful in gaining a bigger share of the market in the region.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
Photo Credit: Jon Russell/Flickr.com
This segment is a part in the series : Billion Dollar Unicorns
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