Uber will have a hard time expanding in the Southeast Asian region as rival Grab recently raised $750 million in a funding round.
The funding will put additional pressure on the U.S. ride-sharing company, which now aims to expand in the area after it exited China. Earlier this year, Uber inked a deal with its major rival in China, Didi Chuxing, in which the U.S. company sold its China operations to Didi.
Grab is not the only venture in the area that has secured the trust of and cash injections from investors. One month ago, Indonesian company Go-Jek pulled $550 million, which underlines that the competition in the area is growing fierce.
Grab, which already has a four-year experience in the area, was assisted in the funding round by SoftBank Group from Japan. The ride-sharing venture says that the cash will be used to increase the company's presence in the Southeast Asian market.
Grab's CEO, Anthony Tan, commended the funding in a recent statement in which he underlined that investors see Grab as both a market leader having long-term growth potential in the region.
As more countries in the region adopt car-sharing services, the area becomes a crowded battleground for taxi-hailing firms. Most of their customers are from the young and internet-savvy demographic as well as from the blooming, fast-growing middle class.
Uber is not ready to give up the Southeast Asian market, and the company is backing its determination by pushing more staff, technology and resources in the area after signing the deal with Didi.
Insiders familiar with the matter are touting that the enterprise is delegating more than 150 engineers to work on its Southeast Asian operations, and plans to expand the workforce in India are in tow. Other rumors claim that Uber is investing massively to be sure that its maps fit the region.
Uber refused to officially comment on Grab's fund-raising.
The funding valuated Grab at more than $3 billion, an anonymous source notes. Additional reports indicate that Grab's full capital position went to more than $1 billion. The company reports that institutional investors from China and the United States attended the funding.
"Grab has grown tremendously over the past year," Tan points out.
As his company managed to pull $750 million from investors, we might see this growth become a stable trend for Grab, which claims to be the top third-party taxi-hailing service in Southeast Asia.