Less than a year after Uber called it quits in China and sold its subsidiary to rival Didi Chuxing, the Chinese ride-hailing platform is now set to raise at least $5 billion. According to reports in the Bloomberg, this deal will possibly make it one of the most valuable startups in China. It is one of the largest deals in the Asian Venture industry.
Early last month, Didi also launched DiDi Labs in Mountain View, California. The PR Newswire states that DiDi Labs will focus on AI-based security and intelligent driving technologies with an aim to attract top engineering talents to advance transformation in the transportation sector.
In line with the same, the recent fund raise is believed to be used for automated driving expansion. With this speculated $5 billion raise, the valuation of the Chinese ride sharing platform will touch about $50 billion. According to Bloomberg, the company’s valuation after the acquisition of Uber’s Chinese subsidiary was at $34 billion.
This current valuation ties Didi very close to Uber, in fact, it now comes second to Uber. With its $50 billion valuation, Didi will surpass Xiaomi. The $5 billion funding will give Didi the much-needed capital to focus on a global market. Reports have suggested that Didi, after a four-year strong focus into China, is now looking at expanding into more countries and focus on autonomous driving to artificial intelligence. Putting it once again in competition with Uber and even Alphabet Inc.
After Uber conceded defeat in China, Didi became the leader in the country. However, the Bloomberg report also suggests that Didi’s CEO Cheng Wei has faced challenges in capitalising on the near-monopoly control it has received.
Shanghai and Beijing have reportedly imposed stricter regulations, which have stunted revenue growth. The artificial intelligence lab it opened last month is believed to have lured several stalwarts including Uber’s former auto-security expert Charlie Miller.
After the Didi-Uber deal, the Chinese giant is believed to have made $1 billion investment at an estimated valuation of $68 billion. Didi has over 100 investors as backers, including the top ones such as Tencent Holdings Ltd, Alibaba, Tiger Global Management, and China’s sovereign wealth fund China Investment Corp.
There are several implications that this fund raise might bring to the global ride sharing market. While last year the Uber-Didi deal was viewed as a global truce, with this fund raise and focus on the autonomous driving market, the battle between the goliaths seems to be back.
Anything that happens in the ride-sharing market in Asia, might bring in implications for India as well. While in India, currently the market is being fought by Ola and Uber. Indonesia’s Gojek and Grab have already set up their R&D centres in Bengaluru, India. While Grab has denied that it will be starting operations in India. The team nevertheless said that India’s traffic problems are similar to what is seen in the Southeast Asian market.
In December 2015, Ola, GrabTaxi, Lyft, and Didi Kuaidi had formed a global alliance to take on Uber in India. Also, over the past year Ola has been ramping up its operations, it expanded its category base to cater to a larger market segment, raised $350 million from existing investor Softbank. Uber and Ola have a common investor – Tiger.
But, Ola and Didi also have a common investor – Softbank. And Didi is also an investor in Ola, with Uber holding a small stake in Didi, there is a lot of mixed blood in the cab sector. Are the cab wars going to get uglier on a global scale? Only time will tell.