International investment helped support the increase in on-demand deals in Q3'16.

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Quarterly on-demand deals increased 20% in Q3’16, bouncing back from a two-year low in Q2. Deal count was helped along by a growing number of smaller international deals.

The giants of the on-demand world—Uber and Didi Chuxing—reached a rare agreement this past quarter when Uber sold off its China business to Didi Chuxing for a $1B investment. Overall, however, Uber and Didi accounted for a much smaller share of total sector activity than they did last quarter, and deal count outside of the US, China, and India has grown.

Our on-demand category includes companies that allow users to book services or order goods in real-time, generally via mobile, and receive them same-day or soon after, including rides (such as Uber), groceries (such as Instacart), household services (such as TaskRabbit), and more. The list is publicly available for CB Insights clients; click here to check out the alphabetized list of all on-demand companies.

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Quarterly deals and dollars

On-demand deals increased to 77 in Q3’16 from 64 the prior quarter, rebounding toward 2015 levels. Deal count has fluctuated between 2012 to 2015, but saw its first substantial fall in Q4’15. It dropped further to a eight-quarter low in Q2’16. It remains to be seen if the gain in Q3 is an outlier or indicative of longer-term momentum.

And while deal count may have bounced back, funding still decreased in Q3’16. That said, it would have been difficult to compete with Q2’16, which saw the $3.5B investment into Uber by the Saudi Arabia Public Investment Fund, as well as Didi Chuxing‘s $1B investment from Apple. Funding fell from $6.6B in Q2 to $3.8B in Q3.

Uber again raised the largest deal in Q3’16, with a $1B investment from Didi Chuxing. This deal, a financial shot heard around the on-demand world, merged Uber’s China unit with Didi Chuxing. In exchange for the sale of its China business, Uber gained control over 20% of the newly formed entity. The August 1 deal valued Uber at $68B and the Didi Chuxing + Uber China corporation at $35B. Didi Chuxing also separately raised again in Q3’16, a $120M corporate minority investment from Foxconn.

Grab, an Uber competitor based in Singapore, raised the second-largest deal in Q3’16, with a $750M Series F from SoftBank Group. Airbnb followed with a $555M Series F from Google Capital and Technology Crossover Ventures. Indonesian on-demand delivery service Go-JEK ranked fourth with a $550M Series B, followed by a $275M series E to UK on-demand food delivery app Deliveroo.

3Q16 On Demand Quarterly

 

Since the three largest on-demand companies—Uber, Didi Chuxing, and Airbnb—represent such an outsized proportion of total sector funding, we broke out the quarterly funding trends to Uber, Didi Chuxing, and Airbnb in comparison to funding to all other on-demand companies. In several quarters, those three companies raised more than 50% of the total sector funding.

The top three on-demand companies raised the most money in Q3’15, with investors pouring $3B into Didi Chuxing and $2.2B into Uber. However, the largest differential occurred in Q2’16 when the top three raised 79% of total sector funding: Uber raised $3.5B in private equity from the Public Investment Fund of Saudi Arabia, while Didi Chuxing raised $1.7B throughout the quarter across three deals. In Q3’16, funding to the top three fell to 44% of total sector funding, partially helped by a $750M Series F to Indonesian ride-hailing service Grab.

3Q16 all on demand vs top 3 funding chart

 

Annual deals and dollars

On-demand investment accelerated in 2015, when deal count jumped a whopping 61% and dollar funding more than doubled. The frenzy has cooled this year to some extent, and in the first three quarters of 2016 investors made 224 on-demand deals worth $12.2B in aggregate. At the current run-rate, full-year 2016 is on track to see roughly 300 deals and investment of $16.3B. These totals represent lower figures than last year’s, but are still significantly higher than funding levels in 2014. In fact, in 2016 to date we’ve already seen about as many funding rounds as on-demand companies raised in all of 2014.

3Q16 On Demand Annual

 

On-demand deals by geography

The US has lost on-demand deal share since 2012, slipping from 58% of global deals in 2012 to under 50% in 2015 and 2016 year-to-date. In part, the US’ loss has been India’s gain, as Indian on-demand companies grew to 22% of deal share last year, and 13% this year through Q3, up from just 3% in 2012.

Ride-hailing service Olacabs may be India’s most notable on-demand company, with $1.8B in total disclosed funding, mostly raised throughout 2015. Last year, Olacabs raised over $1.5B across five deals, including a $500M investment from Didi Chuxing. India also supports well-funded on-demand startups such as grocery delivery service Grofers ($166M in disclosed funding), meal delivery service Swiggy ($76M), and grocery delivery service PepperTap ($52M).

Deal share to China increased in 2014 and 2015 but has thus far fallen back in 2016. Deal share to the rest of the world has also increased, while the UK’s share declined since 2012. Other countries’ deal share hit a new high at 28% in 2016 YTD, boosted by a number of deals in France, Spain, Germany, Canada, South Korea, and elsewhere.

3Q16 On Demand Geo

 

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