We analyze the web of backers behind the most well-funded transportation network companies (TNCs), as well as their own investments and acquisitions.
The largest transportation network companies (TNCs) providing ride-hailing, ride-sharing, and on-demand logistics services have grown into some of the best-recognized startups worldwide. These cash-hungry businesses are also some of the most well-financed private companies ever seen, with a complex web of investors, partnerships, and rivalries across the space.
With the broader on-demand economy these TNCs inspired in retreat, even these giants have run into headwinds as of late. However, amid recent news of various cultural and legal problems surfacing at Uber and a downround at Ola, Lyft and Didi have both reportedly set out for fresh capital.
Using the CB Insights Business Social Graph, which maps relationships between investors and target companies, we’ve updated our view on the investor networks of the 5 most well-capitalized private TNCs, including Uber and Didi Chuxing, as well as , Ola, and Grab. We also added an investor social graph to track the investments and acquisitions made by these companies as they have ramped up their own activity.
Company social graph (investors in these companies)
Note: Didi Chuxing’s graph also includes the backers of its pre-merger constituents, Kuaidi Dache and Didi Dache. The 5 ride-hailing startups are highlighted with their logos, and investments from one to another are highlighted in bolded lines per the legend. Click on the image to enlarge.
The fierce battle for ride-hailing supremacy in the world’s most populous market saw the two giants Uber and Didi Chuxing raise unprecedented amounts of funding as they rose to stratospheric valuations. Since Uber’s China unit entered the fray in 2014, both companies spent billions on driver and rider subsidies to fight for every point of market share, which ended abruptly with the August 2016 deal for Didi Chuxing to acquire Uber’s China arm. The deal also saw Didi assume control of Uber’s China operations and brand while integrating its technology behind the scenes.
We used this social graph and the CB Insights database to pull further insights on the data:
- Uber retreated from China, but not empty-handed: In roughly two years in the Chinese market, by most accounts Uber burned about $2B in capital on its aggressive promotional strategy. Ultimately, the terms of the acquisition had Uber and Uber China’s investors retaining 20% of the post-merger Didi, with Uber effectively holding 17.7% (from a 5.89% preferred interest with voting rights) and Baidu and other Uber China shareholders receiving 2.3% between them. At the time of the deal, Uber became largest single shareholder in this combined entity.
- Didi has invested in every other top 5 ride-hailing company: As part of the Uber China deal, Didi Chuxing also invested $1B into Uber at a $68B valuation. Didi’s previous initiative to build a global “anti-Uber” coalition saw it inject capital into each of the other top ride-hailing companies, including India’s Ola, Singapore’s Grab, and Uber’s American rival Lyft. The alliance included plans for airline codesharing-esque features for cross-app booking, but the partnership has been quiet since the Uber China acquisition.
- Downrounds and debt: This week Ola raised a fresh $330M from SoftBank and other investors, but the new round cut the company’s valuation a full 30% from $5B to $3.5B. 2016 saw Uber dipping into new financing instruments, turning to the leveraged loan market for the first time for $1.15B. With these companies still burning cash to invest in new markets and technologies, it will be interesting to see how much investor appetite remains in the market, and whether the largest players will continue finding alternate funding sources to avoid diluting already byzantine cap tables. Reports around Didi’s new potential round already indicate some investor dissatisfaction around further dilution.
- Investor webs are more tangled than ever: Besides the companies themselves, our Business Social Graph also shows how complicated the picture has become for the investors backing them, from VC firms to hedge funds and corporations. For one thing, Didi Chuxing (including all its pre-merger constituents) has now been backed by each of the Chinese big three internet companies — Alibaba, Tencent, and Baidu. The cross-pollinations in the space fostered by Didi have also made many investors indirect backers of rival ride-hailing companies. This includes investors like Coatue Management, which had originally backed ex-Uber challengers in Didi Chuxing, Lyft, and Grab. Interestingly, Apple, which backed Didi in May 2016 to the tune of $1B, now has a link to Uber as well. As an ironic footnote, Uber’s Didi stake gives it an indirect position in each of its regional opponents.
- Other investors with multiple stakes: Tiger Global Management has invested heavily in Ola, but has now also invested in Uber, Didi Chuxing, and Grab. SoftBank has invested in each of the three leading Asian companies (Didi, Ola, and Grab). Meanwhile, Hillhouse Capital committed heavily to China by backing both Didi and Uber China, but has also participated in a round to Grab. Chinese internet rivals Tencent and Alibaba have common interests in both Didi and Lyft.
Investor social graph (investments & acquisitions by these companies)
Note: Green lines indicate investments, while orange lines indicate mergers & acquisitions. Click on the image to enlarge.
A few further insights here:
- Uber’s moves in auto tech, AI, and mapping: Uber has made notable acquisitions to bolster its autonomous driving, with the now-controversial purchase of Otto (not pictured is the company’s heavy recruitment of CMU researchers to found its Advanced Technologies Group). The TNC also acquired the startup Geometric Intelligence to serve as a central AI lab for the company. Uber has also acquired both deCarta and mapping assets from Microsoft’s Bing as it seeks to reduce its dependency on Google Maps (and possibly feed its self-driving program). In July 2016 the company was said to be investing a further $500M to enhance its mapping system; recently Uber’s mapping vehicles have ranged as far as Singapore.
- Didi an active investor: Besides its stakes in all the other top 5 TNCs, Didi also invested in Brazilian counterpart 99 (fka 99Taxis) in January 2017. Besides other TNCs, Didi has taken an active role supporting the on-demand ecosystem in China, investing in both food delivery service Ele.me and on-demand bike sharing platform Ofo.
- Grab entering the scene: Although the Southeast Asian company has been least active investor to date, that looks set to change with the company’s recent pledge of a $100M minimum investment pool to be funneled into promising Indonesian startups. Simultaneously, Grab also acquired online payments startup Kudo in its first major purchase.
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