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Didi Kuaidi funds Ola as Uber's rivals start to team up

This news comes only weeks after Didi Kuaidi partnered with Lyft, investing $100 million

Financial trends and news by Steven Loeb
September 28, 2015
Short URL: http://vator.tv/n/4059

For all of Uber's accomplishments, including being the highest valued private company in the world, is also has plenty of competition. In China that would be Didi Kuaidi, the company that, earlier this month,raised a $1 billion funding round

It's strategy to defeat Uber is an interesting one: it seems to be taking that money and using it to fund Uber's rivals in other sectors of the world.

Didi Kuaidi has invested in Uber's biggest rival in India, Ola, according to a report out from Reuters on Sunday. The size of the investment has not been disclosed, though the report did list SoftBank Corp, Falcon Edge, Singapore sovereign wealth fund GIC [GIC.UL] and Tiger Global Management as other investors in the round.

Ola is having a big fundraising year. In April, the company raised a $400 million Series E funding round, which was followed by a $225 million round earlier this month. In all, Ola has raised over $900 million in venture funding. 

This funding will no doubt help Ola continue to grow, and stay ahead of Uber. The company had already grown from 10 cities to 100 in the past year, and said that it hoped to be in 200 by the end of this year. Uber, by contrast, is only  in 11 cities in India, though that still makes it the company's largest market outside of the United States.

It also does not help Uber that it's presence in India has become complicated following an incident in New Delhi in December, where a passenger was allegedly raped by a driver. This caused the service to be sued, as well as banned in that city, and in Hyderabad.

The company has since strengthened its safety and security features in response. That included enhanced driver screening through tools like biometrics and voice verification, and stricter background checks on drivers. While the woman dropped her lawsuit against the company earlier this month, the government still rejected Uber's application to operate in the capital city.

It should be noted that Ola was rejected as well, but that none of this has stopped either company from operating there. Uber restarted services in the capital earlier this year, even though New Delhi said it was still banned in the city. Ola was also bannedin New Delhi, yet also still remained in operation as well.

Ola now says it has 750,000 rides per day, foe an 80% marketshare, through a network of 320,000 cars across the country. Uber, on the other hand, is only averaging around 200,000 a day in India.

Despite these headaches, Uber is doubling down on its investment in India. It raised betwen $75 million and $100 million from Tata Opportunities Fund, a private equity fund linked to India's Tata Capital, in August. It has said that it will be putting $1 billion into the region, and that it plans to average more than 1 million rides a day in India over the next six to nine months.

Funding Uber's rivals seems to be Didi Kuaidi's way of competiting right now. Only a few weeks ago it partered up with Lyft, which is Uber's main competition in the United States, as well as investing $100 million into the company. The partnership calls for the two sides to share local knowledge and other business-related resources with each other, for cross-platform and cross-regional market development.

Didi also put money into Grabtaxi, an Uber-style e-taxi service operating in Southeast Asia, participating in a $350 million round in August. 

Didi Kuaidi is absolutely dominating the Chinese e-hailing market at the moment: there are 2 million taxi drivers in China, and 1.5 million of them are on the Didi Kuaidi network. It does not seem to be taking any chances, though, giving Uber a lot to worry about in its other big markets around the country.

VatorNews has reached out to Didi Kuaidi and to Ola for confirmation of this new funding. We will update this story if we learn more. 

(Image source: moneysedge.com)


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