Grab, the ridesharing startup in Singapore similar to Uber in the U.S., may raise more than $1 billion investment from strategic investors in a venture capital funding round including Alibaba and SoftBank.
According to a report in Bloomberg, people familiar with the matter said Alibaba head Jack Ma could team up with SoftBank to jointly invest $1.5 billion in venture capital in Grab through his eCommerce company or Ant Financial, the financial arm of the company. With the backing, the investors are hoping the ridesharing company can better compete against Uber Technologies in Southeast Asia. Didi Chuxing, the leading carsharing company in China, is already an investor in Grab and is mulling participating in the latest venture capital round. With an investment in Grab, Alibaba or Ant Financial would be able to push Alipay, the mobile payment service, to millions of consumers in the region. Alibaba rival Tencent is already backing Go-Jek, the carsharing competitor to Grab in Southeast Asia, to get consumers to use its digital payment service.
If Grab is able to raise $1.5 billion, it may set a financing venture capital record for the region and could give the firm a valuation that is greater than $3 billion. Bloomberg noted SoftBank is reportedly putting up $1 billion either through the Japanese bank or via its SoftBank Vision technology fund. The Vision Fund closed in May after raising $95 billion. For Alibaba and Tencent, the move to invest in ridesharing apps in Southeast Asia comes at a time when their core markets in China are getting saturated and they are looking overseas to expand. Southeast Asia is particularly attractive given the size of its population.
For some time now, Grab has been in expansion mode. In March it announced it is opening two new research and development centers and is gearing up to hire 800 developers. According to a report in Reuters, the new hires will happen over the next two years. The R&D centers will be located in Bengaluru and Ho Chi Minh City. The company already has R&D centers in Seattle, Beijing, Jakarta and Singapore. Grab is aiming to benefit from the expected growth in South and Southeast Asia, noted the report.
“Southeast Asia is developing at a breakneck pace,” Grab cofounder Tan Hooi Ling said in a statement to Reuters.