Didi Kuaidi, the Chinese cab aggregator which currently rules the markets there, and makes sure Uber bleeds cash to gain whatever it can, is bringing in more worries for the latter. Bloomberg and WSJ report, that the company has received funding commitments to the north of $1 Billion from a group of investors, valuing the company in excess of $20 Billion.
Several reports are further stating that the round is oversubscribed, and the company is still negotiating terms with investors, the person said. Didi Kuaidi declined to comment.
The ride-hailing segment isn’t new to getting massive cash, at all. And Didi Kuaidi for sure, is pretty much habitual to the same. The company had last raised a gargantuan $3 Billion round at a $16.5 Billion valuation, which came at exactly the same opportune time, when Uber raised a $1.2 Billion round — specifically for its Chinese operations.
And while things have been good for Uber in its home market, the US (at least thats what Travis Kalanick has to say), they sure as hell haven’t been rosy here in Asia.
In China for example, Uber is bleeding cash like anything, betting upon getting more volume of bookings to compensate for that massive spending. The company received a major boost when it tied up with Baidu for a strategic investment worth over $600 Million. However, that might not have helped Uber with its cash spending woes, with the company spending more than $1 billion in the country last year, with plans to spend a comparable amount in China, in 2016.
Kalanick, in an interview last week with Canadian blog BetaKit,had mentioned how Uber has a “fierce competitor that’s unprofitable in every city they exist, but (is) buying up market share“. That obviously was a reference towards Didi Kuaidi, which has been actually been rumoured to do exactly that.
Further up, Kalanick also mentioned how he actually doesn’t want to raise more money, but is forced into raising more, due to Didi Kuaidi’s ‘market buying’ strategy. this is what he had to say,
I prefer building rather than fundraising. But if I don’t participate in the fundraising bonanza, I’ll get squeezed out by others buying market share.
Overall, Uber had reportedly lost close to $1.7 Billion to fuel up global operations, much of it going towards fighting competition from Ola in India, Didi Kuaidi in China and GrabTaxi in South-East Asia.
Make no mistake though, this massive cash-raising spree in the ride-hailing segment isn’t gonna stop, anytime soon. There’s probably another billion dollar round in line, if not in China, then perhaps here in India.