After weeks of reports that Didi Chuxing, the Uber of China, was raising another monster round of funding, today the company confirmed the close: it has raised a fresh $5.5 billion, it said in a statement today, to continue global expansion and to invest deeper into emerging areas like artificial intelligence to bring more advanced systems to its transportation service.
The company didn’t close valuation but sources very close to the company confirm to us that it is over $50 billion, with new investors Silver Lake Kraftwerk joining previous investors SoftBank Group Corp., China Merchants Bank Co. and Bank of Communications Co. in this round. Other previous investors not named in this round to us by sources: Apple, which has invested $1 billion in the company.
As Dan Primack noted this week, one reason that DiDi might have delayed announcing is because the Vision Fund — a new, $100 billion investment fund that Softbank had started that includes Apple, Foxconn, and Saudi investors among its partners — had not yet officially closed. In the event, we’re also trying to find out if that is the case, too.
The deal comes at an interesting time for the on-demand transportation business. First, there is the business opportunity: Uber, the global leader and valued at over $60 billion, is facing a lot of turmoil internally and externally as news continues to come out about its aggressive approaches to business and how they impact employees and the general public. This creates a window of opportunity for other companies to come in and make a mark for themselves. That’s something that both Lyft (which saw bookings rise 137 percent amid a viral #deleteuber campaign) and much smaller competitors like Gett (which acquired Juno this week) are also capitalising on. Given what is surely more regional consolidation to come, DiDi could be hoping to make some moves, too.
On the other hand, there is the more basic business of ridesharing and transportation and how that is evolving. Turning again to Uber, the company is making some moves in the field of autonomous driving and figuring out how and where it might use some of this technology to grow and make its own fleet of services more efficient. Others like Apple and Google and carmakers are also investing heavily in this space.
While those moves are being met with a lot of controversy at times, it’s also inevitable that these companies will be looking at and upgrading their technology, and equally continue to invest to keep up with each other. This was another reason why DiDi needed to raise money and invest now, lest it be left behind.
It has already made some moves here, with a lab in Silicon Valley. “Investors’ support reflects strong confidence in the vision and stewardship of DiDi’s management. As a global technology leader, DiDi is striving to advance the transformation of transportation and automotive industries through active internationalization plans; and bring value to urban transportation markets around the world through cutting-edge big-data capabilities, products and expertise,” the company said in a statement.
“Building on its competitive AI-based analytics capabilities, DiDi is working towards systemic breakthroughs in intelligent driving technologies and smart transportation architecture. With the launch of DiDi Labs in Mountain View in California earlier this year, the company continues to attract the industry’s top minds and explore investment opportunities in core technology areas.”
What’s interesting also to contemplate is whether DiDi will finally be expanding its footprint outside of China. To date, the company has done so only in the form of partnerships, intended to make for a more seamless experience to travellers as they go outside their home market but want to continue to use the same app and payment system as before.
But there is some clear economy of scale to outright ownership, though, especially when considering how DiDi invests in infrastructure, and it’s notable that DiDi mentions the global opportunity in a statement that is otherwise very light on specifics.
“With this new investment, DiDi will continue to work with communities and partners around the world to provide more innovative mobility services, and to expand smart urban transportation programs as part of its efforts to build an efficient and sustainable global mobility ecosystem,” it noted.
This latest round brings the total raised by DiDi to about $13 billion. Uber, by comparison, has raised $8.81 billion.