InDrive, the “bid-based” ride-hail platform popular in Latin America and Asia, has launched a new venture and merger and acquisition division named New Ventures to invest up to $100 million in startups within emerging markets over the next few years.
The new venture arm comes four months after InDrive launched in its first U.S. market of south Florida. As InDrive works toward profitability, the company sees this as a chance to diversify revenue streams.
“We see great opportunities in different verticals across our ecosystem,” Andries Smit, vice president of New Ventures, told TechCrunch. Smit noted that the timing was right because in the current economic climate, valuations have returned to normal, which could make investing in startups more lucrative for InDrive.
InDrive, which originated in Russia and is now based in the U.S., will be targeting startups from regions where it already has a presence, like Latin America, the Middle East and Africa, Southeast Asia and Central Asia.
“We need to add value to those businesses as much as they add value to us, and therefore the biggest leverage is in the markets we’re already in with some significance” said Smit, noting that InDrive is also well positioned to help “local gems” break into new markets.
“And in those cases, we are very interested to invest and potentially even acquire,” said Smit.
InDrive will be investing vertically and horizontally from the ride-hail industry, with an eye toward either acquiring or using the services of those companies.
The first “bullseye” for potential investments would be startups with adjacencies to ride-hail, like delivery, where drivers can tap into an additional service. In May, InDrive acquired Master Delivery to add to its product offering.
The second bullseye, says Smit, is horizontals like fintech or insurtech, technology that could solve a specific problem that InDrive’s audience of drivers and passengers may be facing.
The $100 million won’t come from a fund, exactly. Smit said the plan is to invest the money “over the next few years by making annual allocations of investment capital from our balance sheet, starting in 2024. We will size the annual allocations based on the size of our pipeline of investment opportunities that meet our stringent growth and scalability criteria and resonate with our corporate mission.”
Smit wouldn’t clarify where exactly on InDrive’s balance sheet the money will be coming from, saying that it will be a combination of cash flow generated from operations and capital received in the past. In February, InDrive raised $150 million from General Catalyst in a debt financing round. TechCrunch has asked if the company is still unprofitable and if it intends to raise more funds soon.
The New Ventures unit will largely provide capital to post-seed/Series A-stage companies that can demonstrate substantial year-over-year growth exceeding 2-3x. The venture arm also underscores the significance of healthy economics and cash flow in its portfolio companies, showcasing efficiency across loan-to-value, customer acquisition cost and retention metrics.
InDrive says its New Ventures unit will help its portfolio and acquired companies scale quickly across its main ride-hailing platform, gaining access to the company’s go-to-market know-how, technology and over 200 million active customers across more than 45 markets and 700 cities.
Smit took over the new unit in October, after having held strategic positions in startup and corporate settings. His career includes leadership roles in business transformations, acquisitions and integrations at major corporations such as Morgan Stanley and Aviva. Additionally, Smit has contributed to building ventures as a partner at Stryber, a prominent strategic growth partner and independent corporate venture builder operating in Europe, the Middle East and the Asia-Pacific region.
In addition to ride-hailing, inDrive, which raised a $150 million Series C round in 2021 from Insight Partners and General Catalyst at a $1.25 billion valuation, is working on building out its product offering. The company has expanded beyond ride-hail and into intercity transportation, freight delivery, task assistance, courier delivery and employment search.
This article has been updated with more information from InDrive and Andries Smit.