Grab is investing $100M in startups to help it battle Uber in Southeast Asia

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Grab is upping its battle against Uber in Southeast Asia by announcing a flurry of new initiatives in Indonesia, the region’s largest economy and world’s fourth most populous country, which include setting aside $100 million to invest in startups.

Today the Singapore-based company, which is valued at $3 billion and claims 33 million downloads, announced what it is dubbing “Grab 4 Indonesia 2020.” It said the government-backed plan will put $700 million in investment to work in Indonesia, which is the largest of the six markets in serves in Southeast Asia, over the next four years via a range of activities. This push comes as Uber’s ramps up its focus on Southeast Asia (and India) now that it is disposing of its loss-making China business, which reportedly sucked up $1 billion per year.

The $100 million startup investment commitment, which Grab said is a minimum, is aimed at promising Indonesian companies and entrepreneurs that fit with Grab’s. It isn’t a formal corporate fund, and will be handled by Grab’s existing team in Indonesia alongside executives such as President Ming Maa, who joined from investor SoftBank last year and runs a range of operational areas for Grab.

“We have a strong belief that we’re not the sole source of innovation in Southeast Asia,” Maa told TechCrunch in an interview. “We want to help develop an ecosystem of entrepreneurs working to improve lives in a very tangible and real way you just don’t see in other parts of the world. There’s [currently] really a lack of infrastructure and support to help those who want to make a difference.”

Maa refused to be drawn on the kind of deals that Grab would go after, other than that it is seeking companies that align with its business.

“The focus will be on really promoting entrepreneurship with focus on mobile payments, and localized solutions for transportation. We hope to see a number of companies and entrepreneurs come through the fund and be part of the Grab platform,” he said.

While the commitment is $100 million, Maa said he hopes to spend more.

Elsewhere, Grab is committing to open an R&D center in Indonesian capital Jakarta, which it said will create 150 engineering jobs over the next two years. Grab already has centers in Singapore, Beijing and Seattle, but the Jakarta base will focus on local issues for its business, such as dealing with the Jakarta’s congested roads, tech to enable a motorbike pooling service, and more.

Grab has already begin work on a mobile payments platform which is its third focus in Indonesia. That might not sound like an entirely logical step for a transportation enabler, but the strategy serves many purposes. Most obviously, eliminating cash makes the rider experience easier, while it also helps users get into a range of non-ride services that it offers in Indonesia.

But more widely beyond that, it is also about expanding the number of people who would use Grab.

Smartphone sales continue to grow in Southeast Asia despite an overall slowdown worldwide, yet financial and banking services have a far more limited footprint, which is why Grab and rivals like billion-dollar Indonesian bike on-demand startup GoJek, want to be the enabler who brings these services to the mass market. Owning a user’s daily financial transactions unlocks vast potential and engagement beyond merely being there when that person needs a ride.

Grab already has deals in place with big commerce firms in the country, like Lippo, to enabling in-store purchases, and next on its list is financing options.

“We spent the past few years solving and winning the transport part of the business [in Indonesia], going forward, we will focus on payments and services around payments,” Maa explained

“These are real problems that I think deserve a solution in way that hasn’t been seen in markets today. 80-90 percent of the [Indonesian] market hasn’t really had access to mobile payments, modern banking, or modern credit, which we think is so important to develop Indonesia’s digital economy.”

Maa said that the initiatives hatched in Indonesia would eventually make their way into Grab’s other countries — which include the Philippines, Vietnam, Thailand and Malaysia — but he stressed that Grab would take a local approach in each one.

Southeast Asia’s ride-sharing market is predicted to grow from $2.5 billion in 2015 to $13 billion by 2025, according to a report co-authored by Google. Grab is currently in six countries in the region, but it hasn’t made any geographical expansions for some time. Maa admitted there are some “interesting” markets where Grab isn’t present, but he didn’t commit to new country launches this year.