As the most invested unicorn in Southeast Asia, Grab has attracted quite a number of strategic and financial investors onto its cap table.
The latest around – Series H – was kickstarted in June 2018, shortly after the company announced its intention to become the “Super App” of Southeast Asia. After that, news kept coming out with new commitments.
It seems the target for this round has been increased from US$3 billion to US$5 billion. This is also amidst a new round of investment by rival Go-Jek, which seeks to value the Indonesia-based company above US$9 billion.
For any potential investor, knowing who has invested/will invest into a venture is crucial in deciding whether they would also want to participate. Big investors will have a stronger say in the direction of the venture, and new investors will need to assess the existing investors’ commitment, as well as ultimate aim.
The relationships and the journeys that some of these investors took are very interesting in itself.
The Godfathers: Uber, Softbank, Didi Chuxing
These are the three major shareholders. Their relationship is actually complicated. In short- Softbank is a major shareholder of Uber, Didi, and Grab; Uber became Didi and Grab’s largest shareholder after the latter acquired its operations in China and SEA respectively.
There have been many reports on how Masayoshi San approached Cheng Wei, Anthony Tan and Dara Khosrowshahi separately, offered them crazy amount of funds for his backing, or asked them to watch it go to their rivals. Masayoshi reportedly told Anthony Tan “Anthony-san, you take my money. It’s good for you. It’s good for me. If you don’t take my money, not so good for you.”
In hindsight, it has been very good for Grab, Uber and Didi. Softbank has been instrumental in pushing for the truce between Didi and Uber in China, and last year between Uber and Grab. For all three companies, the message is the same – stay in your lane, curb losses, focus on core markets, prepare for an IPO.
SK Holdings
SK Holdings is one of the largest chaebols in Korea. It is the parent company of the telecom-to-energy conglomerate SK Group, and aims to diversity into future mobility. It has been investing heavily in the mobility business in Southeast Asia. It has also invested in SoCar (Korea’s ride hailing app), and Turo (US peer to peer car sharing service).
SK Holdings invested in the March 2018 US$2bil round as a strategic investor. Even though the amount invested is small overall, SK Holdings currently holds an “observer” status on Grab’s board as its role is expected to go beyond a financier to a technology provider with the ability to offer critical technology assistance to Grab.
Tiger Global Management fund
In Oct 2014, the secretive New York based Tiger Global Management fund led Grab Series C round of about US$65mil – with existing investors GGV Capital, Vertex Venture Holdings, and Qunar also participating. Hillhouse Capital Management also joined in as a new investor. Tiger had also invested in Didi, Ola and Uber.
In 2015, when Tiger then invested in Uber, it made more than a few investors from India to USA furious. One investor that backed at least one ride-hailing firm said “Tiger was ignoring an “unwritten rule” of venture capital where when raising money, companies do not stipulate, but it’s understood that investors cannot back its competitors”. Another investor also commented that “Whilst it’s ok to invest in a few similar companies on the public market, it’s different on the private market. Companies share confidential metrics and financial numbers with its investors – and this will tarnish their brand and trustworthiness.”
Even so, Tiger held onto its ground. Its rationale then was that “Tiger was not hedging its bet on one player, but betting on the overall growth in a market that will feature multiple players.”
This was scorned upon by many investors back in 2015, but it seems to be the winning formula when Softbank did the same in 2017.
GGV
GGV which holds 1% of Grab Cap table in 2018 was one of Grab’s early backers. It led the US$15mil Series B fund raising round together with Qunar and Vertex Venture Holdings (which led the US$10mil Series A fundraising round). After Series B fund raising, GGV managing partner, Jixun Foo also joined the Grab board of directors. GGV is also an early investor in Didi.
Foo had made a statement back in May 2014 that “Grab’s focus and understanding of local markets will fuel their success and provide competitive advantage. Therefore we believe that GrabTaxi for Southeast Asia and Didi for China will be the go-to transport app in their regional markets.”
New investors on the block
Auto manufacturers
A number of automobile companies have invested in Grab’s Series H, with Toyota committing US$1billion.
With the profit warnings from Ford and General Motors in 2018, as well as ride-hailing gaining traction, it is expected that global automobile ownership will decrease. Automobile companies are right to diversify their business -and partnerships with one major player is a good way to start.
Toyota had previously backed Uber Technologies; and its trading arm, Toyota Tsusho Corp had already invested an undisclosed amount in Grab in 2017.
With Yamaha Motors, the strategic partnership will focus on motorcycle ride-hailing in Indonesia.
Interestingly, Grab also has a strategic partnership with Honda, announced in 2016, where an investment was involved.
Honda and Yamaha together account for more than 90% of motorcycles sold in Indonesia.
The partnerships with Hyundai and Kia, two Korean auto builders, meanwhile, will focus on electric vehicles.
In Momentum Works’s view, the investment from these automobile companies would be to gain partnership, understand the new age customers driving behaviour and build up the services and products for a ride-hailing economy. Although this might be hard to realise in practice, it is much better than not having a seat on the table.
For Grab – these partnerships will focus on new R&D for mobility – e.g electric vehicles, fleet management, autonomous cars, telematics based insurance as well as safety which is a key area of focus. To deepen the strategic collaboration, one Toyota executive will be appointed to Grab’s board of directors and a dedicated Toyota team member will be seconded to Grab as an executive officer.
Booking Holdings
The US headquartered online travel firm – Booking Holdings has participated in Grab Series H. Booking owns overseas travel sites like Booking.com, Agoda.com, KAYAK and Priceline.com. Previously, Booking had also invested US$500mil in Didi in July 2018.
In Oct 2018, Grab and Booking announced a strategic partnership. With the partnership, Booking Holdings’ brands will have the ability to offer Grab transport services through their Booking apps. Grab customers will be able to book accommodations on their Grab app and seamlessly make payments via GrabPay.
This is a strategic win-win for both parties to increase the stickiness and relevance to their customers. The latest demise of Zuji is a warning for companies who are still focused on keeping to their silos.
Also, Booking.com’s arch-rival Expedia had put US$350 million into Indonesia’s homegrown OTA Traveloka, making it strategically important for Booking to gain a foothold in the region, and perhaps to protect Agoda.com, its regional affiliate.
Kasikornbank
The Thailand financial conglomerate announced a partnership to launch a co-branded mobile wallet “GrabPay by KBank” to scale the bank’s merchant and consumer network. Kasikorn bank will also have access to Grab’s data on merchant and drivers to create new loan products and minimize non-performing loans.
Conclusion
Over the next few weeks, it should not be a surprise to us if other big names are added to Grab’s Series H round.
It is interesting to see the role of so many strategic partners from a diverse base. There could be a lot of strategic synergies. To realise all the potential would not be easy – it requires not only a lot of work, but also good coordination and perhaps a lot of focus.
That, however, is necessary. Customers are becoming more mature, demanding, but will their consumption power increase? Grab will need to prove that it can be a “Super App”, and “will it be strong enough to defend against Go-Jek”, who itself is also eyeing to be the SEA Super App champion?
We will continue to watch this space closely.