Grab’s ambitious plans to digitize Southeast Asia’s economies may get $500 million boost from SoftBank | Industry
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As people grow increasingly cynical about the power wielded by major tech companies, the founders of Singapore-based Grab remain unrelentingly optimistic. Now, CEO and cofounder Anthony Tan and cofounder Tan Hooi Ling are putting their beliefs to the test with an ambitious plan to use their ridesharing platform to launch an economic revolution across the eight Southeast Asian countries the company operates in.
What may sound like utopian nonsense to some is nevertheless being validated by major investors who have been persuaded by the company’s passion and vision.
Those acolytes include SoftBank, which is reportedly preparing to pump another $500 million into the company as part of a $1 billion round Grab is trying to raise, according to Reuters. That’s on top of $6 billion the company has already raised, including $1 billion earlier this year from Toyota.
Having vanquished ride-hailing rival Uber in the region earlier this year, the company has now fully turned its attention to becoming a single destination that will eventually offer users access to just about any service they could possibly need. Grab believes it can be the catalyst that transform these developing nations by allowing them to fully participate in the digital economy.
“The way we thought about it is that in that region, many larger parts of the population are coming online for the first time,” said Theo Vassilakis, Grab’s chief technology officer. “We saw the opportunity to give them the things they need for their everyday lives in one place that they trust, and that just works.”
Vassilakis recently sat down for an interview with VentureBeat while he was in Paris speaking at the France Digitale Day. His presence was just the latest sign of how the company is expanding its international outreach even as it remains singularly focused on its home region. Vassilakis, a son of Greek immigrants who was based in Seattle, joined the company one year ago.
Among the biggest projects he’s overseen is the launch in July of GrabPlatform, an open platform that will allow partners to place their service in front of the 110 million people who have downloaded the app across 235 cities. Using Grab’s API, partners can tap into the company’s logistics and payments technology to reach this wider user base in Grab’s eight territories: Singapore, Indonesia, the Philippines, Malaysia, Thailand, Vietnam, Myanmar, and Cambodia.
So far, those new services include Ping An Good Doctor, a China-based health care service that provides online medial consultations, drug delivery, and appointment booking, and GrabFresh, an on-demand grocery delivery service via partner HappyFresh, the region’s leading grocery delivery service.
That may not sound so radical, given that companies like Uber are offering various meal delivery services, and several other startups are offering tele-medicine services.
But the difference here is that Grab has also become a payment and entrepreneurial hub, a massive financial service provider that is enabling access to digital accounts for a rapidly growing number of drivers and riders who would otherwise never be able to open bank accounts or have credit cards.
Back in March, Grab announced its expanded financial services via a joint venture that would enable loans and lending services for users.
“Upwards of 40 percent of people in this region don’t have bank accounts,” Vassilakis said. “We began to think about how we can help join the digital economy. Now we’ve opened 1 million bank accounts for our drivers. That means they can get paid by digital means and also buy things.”
The result is what Grab calls a growing class of “micro-entrepreneurs” — a base it wants to dramatically expand in the coming years. That effort includes a $250 million seed fund announced in August by Grab Ventures, which intends to invest in Indonesian startups to boost that country’s efforts to digitize its economy.
Last year, Grab acquired Indonesian payment startup Kudo, which allows users without bank accounts to buy items online by connecting them directly with sellers or service providers. This is done with the help of more than 400,000 local agents, who now are all part of the Grab ecosystem.
“At the beginning, the company thought about the driver as the primary partner,” Vassilakis said. “And then the agents came on board, and they’re making money on the platform. And then merchants for food, and merchants for payments. So the founders now think of this in terms of micro-entrepreneurs.”
Amid this rapidly expanding roadmap, the company has maintained its focus on the region, something that helped it beat back Uber on its home turf. Vassilakis pointed out that Grab’s app is adapted for each country, as are its transportation options.
While the company has 5,000 employees and six R&D labs, including one in Seattle, the majority are based in the Southeast Asia region.
“The bulk of Uber engineering is based in the U.S.,” he said. “But the engineers in Jakarta will have a better understanding of local traffic and the constraints by talking to local people.”
Uber finally yielded market leadership to Grab in March, when it agreed to sell Grab its operations in the region for an undisclosed sum in exchange for a 27.5 percent stake in the company. The deal hasn’t been without controversy. Worried that Grab was becoming too big, Singapore antitrust regulators fined it and Uber $9.5 million following the acquisition and ordered it to take steps to ensure the market remains open to competitors.
And not all former Uber users were thrilled with the deal. While some complain that Grab’s app is harder to use and less reliable, others are unhappy with the move to include more services, worried that the app will become bloated. In addition, Grab has decided to temporarily suspend services such as carpooling options GrabHitch and GrabShare in Singapore, which were halted over concerns about disruptive passengers and safety.
Still, none of these issues seems to have slowed the company’s explosive growth. Grab reported that it crossed the 2 billion ride threshold in July. While it took more than five years to deliver the first 1 billion rides, it passed the second billion in just nine months. The company projects $1 billion in revenue this year, as use of its financial and food delivery services has more than doubled in recent months.
Even as the platform branches out into new services, Vassilakis said Grab is continuing to invest heavily in mobility services and technologies like artificial intelligence.
“None of the core businesses are finished, by any means,” he said. “Mobility is a deep problem that ties into a lot of areas.”
Still, having solidified its hold in its home territory, Grab is ready to let the world know what it’s trying to accomplish. Beyond buzz, the company is hoping to attract the developers it needs and interest partners from outside the region who want to reach its users base with their services.
“The main thing for us to express to people is the growth that is happening in the region,” Vassilakis said. “It’s interesting for me from a West Coast perspective … how fast things are happening there. There’s a real opportunity to make a difference in people’s lives. Our founders have made a big impact in a small amount of time.”