Grab delays shuttering Uber app as Singapore probes merger deal

Fans of Uber in Singapore will have a little more time to continue using the app after Grab, the rival that is acquiring Uber’s business in the region, agreed to extend the life of the app until April 15 while the country’s competition commission reviews the merger deal.

Grab had originally intended to close the Uber app by April 8, but that has been delayed in Singapore by one week following a request from the Competition and Consumer Commission of Singapore (CCCS) while it continues to assess the implications of the tie-up.

This agreement only covers Singapore, however, so the Uber app will be closed in the seven other countries where it was operational on April 8. Uber Eats is also being transitioned to Grab, as part of its Grab Food platform, and it will be closed at the end of May.

Last week, the CCCS said it has “reasonable grounds” to suspect that the deal may fall foul of section 54 of Singapore’s Competition Act. The organization issued an Interim Measures Directions (IMD) to Uber and Grab — the first of its kind in Singapore — which instructed both parties to “maintain pre-transaction independent pricing, pricing policies and product options,” hence the extension of life for Uber’s app.

Grab said it had provided an alternative proposal “which takes into account our role in Singapore’s vibrant point-to-point transport industry and how Grab serves commuters and drivers,” which the CCCS confirmed that it is reviewing.

A Grab spokesperson declined to discuss the details of the proposal with TechCrunch.

At this point it is unclear whether the Uber app will get another extension. Assuming that the CCCS doesn’t come to a conclusion within the next week and the IMD remains, then Uber may live on a little longer in Southeast Asia . But, if the commission is ready to move on, then the April 15 close will happen as scheduled.

Here’s the key segment of concern to the commission:

About the Section 54 Prohibition under the Competition Act & Merger Procedures

Section 54 of the Act prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition in Singapore.

CCCS is generally of the view that competition concerns are unlikely to arise in a merger situation unless:

The merged entity has/will have a market share of 40% or more; or
The merged entity has/will have a market share of between 20% to 40% and the post-merger combined market share of the three largest firms is 70% or more.

One major factor is how Grab’s business is viewed. The commission defines the space not as ride-hailing — where Grab would appear to hold a significantly dominant position by acquiring Uber’s business — but instead as “chauffeured personal point-to-point transport passenger and booking services.”

In that respect, taxi companies in Singapore — which allow booking by SMS and phone call, and also offer ride-hailing apps in some cases — may be considered competition which might water down Grab’s market share. Likewise, Grab’s case may be helped by Singapore carpooling service Ryde’s plan to add private car services in an effort to fill some of the gap post-Uber.

Here’s Grab statement in full:

Grab continues to engage closely with the CCCS. We’ve had productive discussions on our alternative proposals, which more appropriately address the CCCS’ objectives during this interim period, and which takes into account our role in Singapore’s vibrant point-to-point transport industry and how Grab serves commuters and drivers. Together with the CCCS and Uber, we’ve agreed that the Uber app will run for another week until 15 April, while the CCCS considers Grab’s proposal. We hope the CCCS will complete its review in an expeditious manner, so that we can continue competing with incumbent transport companies and with new entrants. We will continue working with the CCCS and other relevant agencies to ensure a pro-business and pro-innovation environment, so that Singapore consumers can benefit from new and improved services.

In the meantime, the Grab app operates as per normal. The extension also gives Uber drivers more time to sign up on alternative platforms. Grab has helped thousands of former Uber drivers sign up to the Grab platform and will continue to provide support to those who are interested, as well as to obtain their PDVL.

Note: The original version of this article has been updated to correct that the Uber app will only be extended in Singapore, not across all Southeast Asian markets.

Botanalytics offers analytics for conversational interfaces and chatbots

The rise of chatbots and smart speaker-powered voice assistants, such as Alexa and Google Home, has produced the need for specialist analytics so that developers can track how well those conversational interfaces are working. Hoping to take a chunk of this nascent market, including competing with Google’s own chatbot analytics product Chatbase, is Istanbul and San Francisco-based Botanalytics.

Previously backed by 500 Startups, the company quietly raised $1 million in seed funding late last year. The round was led by ACT Venture Partners and will be used by Botanalytics to further develop its technology.

This will include enhancing support for “voice first” platforms, and enabling business to gain actionable insights based on customer conversations, including understanding how to improve customer support across various channels. The idea is to be able to optimise voice and chatbot performance for engagement, retention and other KPIs.

As it stands, Botanalytics supports a plethora of existing platforms including all of the big names: Google Home, Amazon Alexa, Messenger, Slack, Twitter, Telegram, Kik, Twilio, Skype, Line, Microsoft Teams, WeChat and Viber.

The analytics offering spans a number of features, such as “fundamental metrics” measurement, segmenting conversations, tracking activities of a chatbot, retention of conversations, live take-over, broadcast messages and the ability to set up funnels.

The Botanalytics tech also claims to be powered by AI (presumably NLP). This makes it possible to track transcripts of any conversation — including rich media such as video, audio, location and images — and compare live conversations with historical ones.

CEO Ilker Koksal tells me the main difference with Botanalytics compared to competitors is that is it positioning itself as a broader conversational analytics play, including newer voice interfaces, and traditional customer support, not just chatbots. “We’re analyzing all conversational channels of companies,” he says.

To that end, Koksal says Botanalytics’ customers are agencies that build bots for clients and companies with various customer support channels. They include Coca-Cola, McDonald’s, Ford, L’Oréal and GoPro.

500 Startups takes strategic investment from Abu Dhabi Financial Group

500 Startups, the U.S.-headquartered VC firm hit by scandal last year after co-founder Dave McClure resigned following allegations of sexual misconduct, has announced an unconventional deal that sees Abu Dhabi Financial Group (ADFG) take a stake in its parent company.

It is normal for VC firms to work closely with big corporates as LPs that supply money for their funds — the Middle East has proven to be fertile hunting ground for the likes of 500, Uber and Softbank — but direct investment in parents is not common in VC-land. ADFG has been an LP with 500 for some time and Christine Tsai, who heads the VC firm up, said there is “strong alignment on vision and complementary strengths” between the two.

Founded in 2011, ADFG claims to have $6 billion in assets under management via offices in the UAE, UK and Eastern Europe. The firm covers public markets, private markets, real estate and debt investments.

500 isn’t saying what size ADFG’s investment other than it will lead to “substantial capital” being injected into the firm to “accelerate the growth of our key initiatives, expand into new markets, and anchor future 500 funds.”

ADFG will also get a board seat at 500, Tsai confirmed.

Unlike most U.S. VCs, 500 has offices, accelerator programs and micro-funds across the world including Europe and Asia. In the aftermath of McClure’s scandal last year, the firm shuttered its Canada-based fund while a maiden Australia-based program was axed by partner LaunchVic, a $60 million entrepreneurship scheme backed by the government of Victoria, before it even started.

SoftBank leads $450M investment in Paytm’s e-commerce business

SoftBank is at it again giving money to companies that rival startups it has already invested in.

The Japanese firm and its long-time ally (and existing Paytm backer) Alibaba have come together to invest $450 million more into Paytm’s e-commerce business, Paytm Mall, as first reported by Mint. The deal is said to value the business at $1.6-$2 billion, with SoftBank providing around $400 million of the committed investment.

SoftBank is already present in India’s e-commerce space courtesy of an investment in Flipkart via its Vision Fund. The firm also previously backed Snapdeal which it tried to shoehorn into a merger deal with Flipkart that was ultimately unsuccessful.

Alibaba meanwhile has been behind the core Paytm business, which specializes in mobile payments with plans for financial services, having invested $1.4 billion into parent firm One97 Communications last year. This new deal signals its crossing into the e-commerce business, too.

“This latest investment led by Softbank and Alibaba reaffirms the strength of our business model, growth trajectory, execution capability and the potential of India’s massive O2O model in the retail space,” Amit Sinha, Paytm Mall COO, told Mint in a statement.

SoftBank added: “Paytm Mall’s offline-to-online operating model, combined with the strength of the Paytm ecosystem, is uniquely positioned to enable India’s 15 million offline retail shops to participate in India’s eCommerce boom.”

Alibaba’s involvement in Paytm has seen the business — or rather, its many businesses — become proxies for Alibaba in India.

Paytm Mall has linked up with Alibaba’s Taobao marketplace in China to extend the reach of Chinese merchants into India. Similar arrangements have also been reached in Southeast Asia via Alibaba’s Lazada e-commerce business.

Alibaba has also got behind the mobile payment component of Paytm — which bears a likeness to its Alipay  unit — while you can see the influence of the Chinese firm, and in particular its Ant Financial affiliate, with Paytm’s plans to launch digital banking and other online financial services in India.

Indeed, it was through investments by Ant Financial that Alibaba first became associated with Paytm. It’s not a huge surprise, then, to see that SoftBank — often a co-investor — is also spreading its influence across the Paytm business. After all, Alibaba needs all the help it can get to battle Amazon directly in India.

82Labs raises $8M to create a better hangover recovery drink

While taking some time off to travel before his next gig, Sisun Lee spent a lot of time in Korea — where he found himself drinking alcohol pretty much every night and then getting rolling the next morning, regardless of hangover status.

He also found that there were popular local herbal hangover drinks that everyone kept raving about. So he brought a bunch of them back to the U.S., handed them out to friends, and generally got interested in the drink as a thought experiment. After reaching out to scientists in academia about the herbal drinks and finding no one had really commercialized it into a product in the U.S. — and that there might actually be something behind the idea — he decided to start 82Labs and roll out the Morning Recovery drink. The startup has also raised $8 million in new financing from Altos Ventures, Slow Ventures, Strong Ventures and Thunder Road Capital.

“My friends would go to work the next day and they would swear by these hangover drinks with an herbal base,” Lee said. “In many ways that was almost when I was first inspired by it. That was at the back of my head. It turned out it was a massive market, it wasn’t one major brand — all the CPG companies had their own brand. It’s like the energy drink market. I did some research, and [people in academia] might be really passionate about something, and give you this conviction that this is the next big thing, but they wouldn’t commercialize it. They didn’t know how to get going.”

The drink is based on a flavonoid component of popular herbal medicines called DHM. The original concept for the drink was also based on research on DHM from USC, where Lee had gotten in touch with the scientists working on it to see if the idea was actually worth pursuing. That’s then bottled with other components like vitamins, electrolytes, milk thistle and some others which are known to have some detoxifying components. 82Labs initially launched in August, but at the time was literally handing out white powder in little bags — something Lee wasn’t particularly thrilled about. But as more and more interest came in after handing it out to area friends (and product managers) throughout the course of an unscientific experiment, they decided to roll with it and try to turn it into the kind of market you’d find abroad.

Lee and his friends decided to create a website to start sending it out for free for anyone who was interested in signing up. They made a few hundred bottles, gave it a flavor, and put a sign-up sheet online where they would ship it to you. Naturally, however, this is Silicon Valley, so the site ended up going viral and they got so many requests that they needed to figure out what to do next because larger bottling orders came in the tens of thousands. After some work figuring out how they could actually get it to market abiding by rules and regulations by the FDA, the team ended up making an Indiegogo campaign, which raised more than $250,000

“Because of our margins, every user we onboard is profit we generate,” Lee. “But we’ve had to learn a lot really quickly. The big thing for us last year was a big production mistake and we were always supply constrained every order. Sometimes we had compliance issues, quality issues, or mistakes on timeline. everything has been around putting out fires and making sure customers are happy, or giving them refunds December was the first month we had inventory and started to sell during holiday season when people are drinking a lot. We really never had time to think and go, “holy crap, what are we actually doing, what’s the goal here, what’s the mission here.”

Lee said that while Morning Recovery, which costs $30 for a six-pack of the 3.4-ounce drink, is their first drink they don’t want to just stop there. After all, getting a successful beverage to market — even if it turns out there’s plenty of work to do on the science side — requires getting into retail outlets and into the hands of consumers. But if that’s successful, that could easily build a brand and help the company start thinking about the next product that they should make. That direct-to-consumer approach has been increasingly popular amid the success of companies like Dollar Shave Club and others.

But that also means that 82Labs will likely face a lot of challenges, especially if it starts to get traction and larger companies start to take notice of it. Since the market is popular internationally — Lee says it’s a few hundred million dollars annually in countries like Korea — it wouldn’t take much for a consumer packaged goods company with beverage experience to try to produce something similar. So the goal will be to build up enough traction before that happens in order to continue growing.

“If big companies take notice, while they can’t make the exact same product as us, I’m sure they can figure something out,”  Lee said. “We have the advantage of a couple months — once we get to at a threshold in revenue companies will probably notice us. We thought we could keep growing slowly, but if any of these pharmaceutical companies or CPG companies do something, we’re gonna be crushed. Or, we thought we would raise money to front-load expansion purely on growth.”

Singapore says Uber-Grab deal may violate competition laws

Uber’s exit from Southeast Asia is under scrutiny from regulators in Singapore who believe that Grab’s purchase of the U.S. firm’s business in the region may violate competition laws.

Singapore-based Grab, Uber’s chief rival in the region, announced the acquisition of Uber’s Southeast Asian business on Monday. In return, Uber is taking 27.5 percent of the Grab business, which is valued at over $6 billion, in a move that appears to be a win for both parties.

Grab plans to shutter the Uber app in less than two weeks and migrate passengers and drivers to its services. It will also integrate Uber Eats into its nascent food delivery service.

The coming together has already concerned consumers, who believe that prices may rise without two companies competeting head-to-head, and now the Competition Commission of Singapore (CCS) has announced that it is looking into the deal.

The organization said it has “reasonable grounds” to suspect that the deal may fall foul of section 54 of Singapore’s Competition Act.

It added:

CCS is generally of the view that competition concerns are unlikely to arise in a merger situation unless:

The merged entity has/will have a market share of 40 percent or more; or
The merged entity has/will have a market share of between 20 percent to 40 percent and the post-merger combined market share of the three largest firms is 70 percent or more.

That might make the deal a little tricky to explain for Grab, which claims over 90 million downloads and more than five million drivers and agents for its transportation and fintech services.

In a first for Singapore, the CCS said it has proposed an Interim Measures Directions (IMD) that requires both Grab and Uber to “maintain pre-transaction independent pricing, pricing policies and product options.” The commission also directed Grab to not take confidential information from Uber nor lock Uber drivers into driving for Grab.

The commision defines the space not as ride-hailing — where Grab would appear to hold a significantly dominant position by acquiring Uber’s business — but instead as “chauffeured personal point-to-point transport passenger and booking services.”

In that respect, taxi companies in Singapore — which allow booking by SMS and phone call, and also offer ride-hailing apps in some cases — may be considered competition which might water down Grab’s marketshare. Likewise, Grab’s case may be helped by Singapore carpooling service Ryde’s plan to add private car services in an effort to fill some of the gap post-Uber.

Lim Kell Jay, head of Grab Singapore, argued in a statement that the deal with Uber allows consumers a choice against “the dominant taxi industry” and that Grab has already committed to freezing its prices. He added that Grab would work with the CCS and other authorities over the deal as required.

Five years ago, consumers were not able to flag or book taxis easily as supply was a problem. Grab innovated to improve the point-to-point transport within the overall transportation industry, particularly the availability and quality of both taxi and car services. Improving services for commuters and drivers will always be our priority, and we urge the government to allow us to freely compete and complement the dominant taxi business. To address consumer concerns, we have voluntarily committed to maintaining our fare structure and will not increase base fares. This is a commitment we are prepared to give the CCS, and to the public. We have and will continue to work with the CCS, LTA and other relevant authorities, and will propose measures to reassure the CCS, our driver-partners and consumers.

Grab has conducted its comprehensive due diligence and legal analysis with its advisers before entering into and concluding the transaction. We had engaged with the CCS prior to signing and continue to do so. Even though not required by the law, we have informed the CCS that we are making a voluntary notification no later than 16 April 2018 to continue to cooperate and engage with the CCS.

The CCS said it has the power to unwind or modify a deal if it sees that its completion will substantially weaken competition, but it is unclear what that might mean for a regional business like Grab.

Grab and Uber operate in eight markets in Southeast Asia, but Singapore — which is where Grab is headquartered and registered as a business — is the first country where a competitive agency is pouring over the deal.

The US IPO market just had the best quarter in three years

The U.S. IPO market had its best quarter by proceeds in three years, according to the IPO research company Renaissance Capital.

That kind of momentum has seemingly set the stage for some big names in tech to march onto the public market in the second quarter.

Forty-three companies raised a collective $15.6 billion through their IPOs, says Renaissance, though not all were tech deals. One was the IPO of security company ADT, which had been taken private in early 2016 in a $6.9 billion leveraged buyout by the private equity group Apollo Global Management. As MarketWatch noted at the time of ADT’s January IPO, Apollo continues to own a majority of the company’s shares, meaning it’s a “controlled company” where Apollo is still basically in charge.

Another big, non-tech IPO was that of Hudson, operator of the Hudson “travel essentials” and bookstores found at airports across the U.S. and Canada. Hudson is also a controlled company that remains majority owned by a parent company, Dufry AG of Switzerland. In fact, Dufry earmarked all the proceeds from Hudson’s IPO ($750 million) to pay down its own debt.

Neither of their IPOs performed terribly well. Hudson priced at the low end of its proposed range and its shares started to sink almost immediately. ADT’s shares are also trading below their offering price.

As Renaissance notes, three companies that went public and performed much better are the biotechs Menlo Therapeutics and ARMO BioSciences, and the cybersecurity company Zcaler.

Menlo is a seven-year-old, Redwood City, Calif.-based drug developer focused on severe skin itching and chronic cough, and demand for its shares was such that it increased its proposed IPO terms from offering 5.7 million shares at $14 to $16, to offering 6.5 million shares at $16 to $17. Those shares are now trading at roughly $37.

ARMO BioSciences is a four-year-old, Redwood City-based late-stage immuno-oncology company. And it similarly priced its shares above their initial range, owing to demand. The original idea was to sell 6.7 million shares at between $14 and $16; it wound up selling 7.5 million shares at $17. Today, those shares are also trading at around $37.

Both companies went public in January. Meanwhile, Zcaler, a nearly 11-year-old, San Jose, Calif.-based security startup that confidentially filed for an IPO last year, started trading less than two weeks ago at $27.50 per share. Its shares are trading at around the same point as of this writing.

Indeed, biotechs and other tech companies led deal flow, says Renaissance, with 13 and 10 IPOs being staged, respectively.

Some of them were China-based companies, like the video streaming platform iQIYI, which raised a whopping $2.3 billion in a sale of American depositary shares.

The market also had a taste of its first, long-awaited tech company, when the cloud-storage firm Dropbox finally IPO’d last week. It was everything its private investors could have hoped for, too. After selling 36 million shares at $21 apiece last Thursday night, its shares soared 36 percent in their first day of trading last Friday.

Dropbox may have been helped along by its investment bankers (they have a way of making these things pop). Either way, if its performance holds up, we can probably expect more splashy debuts in very short order.

Already on deck, of course, is the music streaming service Spotify. The company has filed to sell shares on the public markets this coming Tuesday, April 3.

LetsGetChecked raises $12M for its personal health tests

LetsGetChecked, an Irish startup that offers a health test kit service so that you can take various common laboratory tests from the comfort of your home, has picked up $12 million in Series A funding.

Leading the round is Optum Ventures, the independent venture fund of health services provider Optum, and Qiming Venture Partners, the Chinese VC firm.

The funding will be used to scale the company, including growing the LetsGetChecked full clinical support team. In addition, the health tech startup plans to further invest in its technology platform that links customers to laboratories, and to continue expanding to the U.S. where it has an office in New York.

Founded in 2014 by Peter Foley, LetsGetChecked has set out to build a technology and logistics platform to bridge the gap between traditional lab testing and consumers. The startup’s home testing kits span a number of categories including “lifestyle testing,” cancer screening, sexual health testing, fertility, and hormone testing.

“Our aim is to make lab testing better, more convenient and patient led,” Foley tells me. “Traditionally, you need to attend a doctor’s office to obtain a lab test. The physician will determine what test is right for you, complete a paper requisition form, collect your sample and send it off to the lab for analysis. You will wait for a period of time to hear back from your physician and may never see the results. This is a slow process and far from convenient”.

Instead, LetsGetChecked mirrors the process that happens in a doctor’s office but in a way that Foley claims puts the patient at the center and makes it more convenient. “We eliminate the middleman and link customers directly to labs enabling them to better manage and control their personal health,” Foley says.

First you decide which tests or groups of tests you wish to access based on hereditary risk, curiosity or simply for health monitoring purposes. You then order the test via LetsGetChecked, which will be authorised by a medical board certified LetsGetChecked physician. A test kit is then dispatched from a LetsGetChecked accredited facility direct to your home. It is also worth noting that the kits are anonymised, containing just a barcode.

Once the test kit arrives, you’re responsible for collecting your own sample, whether that be finger prick, stool (for colorectal cancer), or a swab. You then send the sample to LetsGetChecked and can track progress via the app ‘dashboard’ at any stage during the process or request a call from the clinical team. When the lab processes the sample, the corresponding result will be reviewed by a LetsGetChecked physician and the company’s nursing support team.

“For positive or out of range results, patients will get a call from the team to discuss treatment options,” says Foley. “Only after a consultation will the results be released to the patient’s dashboard where the customer can track and monitor their health over time”.

The tests themselves range hugely in cost, from £39 for a cortisol test, £69 for a prostate cancer test, all the way up to £500 for a BRCA check (why is it that breast cancer tests are 7 times more expensive than testing for prostate cancer). Despite the extra convenience that a service like LetsGetChecked affords, the price of each test soon adds up and begs the question as to why you wouldn’t just visit your GP and request the same tests for free through the NHS.

Meanwhile, the LetsGetChecked founder wouldn’t be drawn on who the startup’s direct competitors are — although in the U.K., Thriva is an obvious example — except to say it was focused internally on innovating and building on its technology platform.

“The aim is to make the patient experience more enriched over time and through API integrations provide for a more consolidated and cohesive healthcare engagement,” he says, hinting at future partners as another way to market. No doubt the strategic investment from Optum Ventures will be able to help on that front, too.

Rackspace may reportedly go public again after a $4.3B deal took it private in 2016

Rackspace, which was taken private in a $4.3 billion deal in August 2016 by private equity firm Apollo Global Management, is reportedly in consideration for an IPO by the firm, according to a report by Bloomberg.

The company could have an enterprise value of up to $10 billion, according to the report. Rackspace opted to go private in an increasingly challenging climate that faced competition on all sides from much more well capitalized companies like Amazon, Microsoft, and Google. Despite getting an early start in the cloud hosting space, Rackspace found itself quickly focusing on services in order to continue to gain traction. But under scrutiny from Wall Street as a public company, it’s harder to make that kind of a pivot.

Bloomberg reports that the firm has held early talks with advisers and may seek to begin the process by the end of the year, and these processes can always change over time. Rackspace offers managed services, including data migration, architecture to support on-boarding, and ongoing operational support for companies looking to work with cloud providers like AWS, Google Cloud and Azure. Since going private, Rackspace acquired Datapipe, and in July said it would begin working with Pivotal to continue to expand its managed services business.

Rackspace isn’t alone in companies that have found themselves opting to go private, such as Dell going private in 2013 in a $24.4 billion deal, in order to resolve issues with its business model without the quarter-to-quarter fiduciary obligations to public investors. Former Qualcomm executive chairman Paul Jacobs, too, expressed some interest in buying out Qualcomm in a process that would take the company private. There are different motivations for all these operations, but each has the same underlying principle: make some agile moves under the purview of a public owner rather than release financial statements every three months or so and watch the stock continue to tumble.

Should Rackspace actually end up going public, it would both catch a wave of successful IPOs like Zscalar and Dropbox — though things could definitely change by the end of the year — as well as an increased need by companies to manage their services in cloud environments. So, it makes sense that the private equity firm would consider taking it public to capitalize on Wall Street’s interest at this time in the latter half.

A spokesperson for Rackspace said the company does not comment on rumors or speculation. We also reached out to Apollo Global Management and will update the post when we hear back.

Southeast Asia exit deal is a win, not a defeat, for Uber

They say in sport that the best teams win even when they don’t perform. On those terms, Uber seems unstoppable.

The day’s big news is that the U.S. ride-hailing firm is leaving Southeast Asia after it agreed to sell its business to local rival Grab. That much is true, but claims that Grab beat Uber out may be overstating the situation.

Ordinarily, you’d call the exit a loss for Uber and a win for Grab, but the devil is in the detail. The deal that has been agreed is a very solid win for both sides which reads more than an alliance than a settlement between winner and loser.

Let’s consider the facts:

Uber takes a 27.5 percent stake in a growing business that was most recently valued at $6 billion.

That stake — worth north of $1.6 billion — is a strong return considering that Uber said today it has invested $700 million in Southeast Asia over the past five years.

Grab takes over and shuts down its largest rival’s business, all while importing any drivers and passengers that aren’t already on its platform and adding Uber Eats to its nascent food delivery play.

That’s a notable outcome for Grab, which started out offering licensed taxis only and required passengers to pay their bill in cash until three years ago. When Uber first arrived the two were hugely differentiated and market share was fairly even, but now Grab is the dominant player in the region by some margin.

Out-gunned

Despite humble beginnings, Grab — which started out in Malaysia but relocated to Singapore — has made strides over the past two years. Today, it offers more than 10 transportation services — including taxis, private cars, car-pooling, bicycle sharing, and bike taxis — across eight countries.

You might read about its localization strategy and how important it is, and for sure it is impressive.

Beyond food delivery — which is now a fairly standard expansion for ride-sharing companies — it has made a push into financial services through its GrabPay service, which allows users to pay for goods and services offline, and a new venture that provides micro-loans and insurance products.

Grab’s focus on fanning out beyond ride-sharing is designed to capture and engage users beyond just offering transportation. The theory is that this not only makes it more useful to users, but it introduces entirely different (and potentially more lucrative) business opportunities that set the company up to become a profitable entity further down the line.

But — and this is the important caveat — this product expansion is in its early stages so the effect didn’t play out on Grab’s rivalry with Uber.

In fact, it looks like a lot of the rivalry came down to the usual factor: Money.

Put simply, Grab has consistently secured the financial backing of its investors.

As one senior Uber employee in Southeast Asia aptly explained to TechCrunch recently: “They just kept giving them money!”

Over the past two years the money factor appeared to swing in Grab’s favor. It raised $750 million in late 2016, and then followed that up with more than $2.5 billion last year to take it to more than $4 billion from investors at a valuation of over $6 billion.

Compare that to the $700 million Uber had invested in Southeast Asia and you can already see an advantage which is particularly key in ride-hailing when two firms are locked in an ongoing subsidy war.

So, for all those comparisons and fancy charts that show the total amount Uber raised as a global business, it was financially outmuscled in Southeast Asia presumably because it chose to limit its investment.

Grab’s money was strategic, too.

SoftBank and Didi, the ‘Uber slayer’ of China, fronted $2 billion of the newest round, while the likes of Toyota, Hyundai, Tiger Global, Coatue Management and influential Indonesian firms Emtek and Lippo are among others to have come aboard in recent years.

That network allowed Grab to hire experienced executives to fill out its team, including most notably Ming Maa, a “deal-maker” who joined as company President from SoftBank 18 months ago.

Uber was often quick to point out that it gave country offices the freedom to suggest and implement localized policies and ideas, but in Southeast Asia it seemed to lack overall coherence. For example, it only appointed a regional head for Southeast Asia last August, some four years after its initial arrival.

That symbolizes its struggle to develop a strategy until it was too late. And that’s without even mentioning the wave of controversies that hit Uber as a company in 2017, which no doubt impacted decision-making outside of the U.S..

Win-win deal

Uber struck decent deals to exit China and Russia, and it appears to be the same again here.

As a private company, it isn’t possible to analyze Grab’s shareholders and their ownership percentages, but Uber is likely now one of the largest investors in the business. That’s the ideal scenario for Uber and its shareholders because Southeast Asia is forecast to be a major growth market for ride-hailing, and Uber is now in the front seat with the market leader.

Currently a loss-making region for Grab and Uber, revenue from taxi apps in Southeast Asia is said to have more than doubled over the past two years to cross $5 billion in 2017, according to a recent report co-authored by Google. The industry is expected to grow more than four-fold to hit $20 billion by 2025, according to the same research.

Uber could have continued on, increased its investment and still seen success, but the deal it has landed allows it to maintain a presence via proxy while diverting resources to other markets worldwide. That stake in Grab, which is worth north of $1.6 billion as of Grab’s most recent funding round, is likely to appreciate significantly over time as the market grows and Grab’s fintech play yields fruit.

Sources close to the deal indicate that Grab gave Uber less than $100 million as part of this deal, and it will take on Uber’s roughly 500 staff across the region in addition to its ride-hailing business and Uber Eats, which is present in three countries.

More than the operational gains, Grab can now count on both Uber and China’s Didi as investors, with Uber CEO Khosrowshahi joining the board. That’s the kind of influence and experience that money can’t buy, and it may be essential for what comes next.

The next stage of ride-sharing in Southeast Asia will pit Grab against Indonesia’s Go-Jek, a $5 billion startup backed by big names including Google and Tencent. Go-Jek is leading in its home market — where it pioneered the kind of financial products and on-demand services that Grab is just launching now — and it houses ambitions to export its empire to new markets starting this year.

One source close to Go-Jek told TechCrunch that the company is preparing to launch in the Philippines potentially before the end of March. Go-Jek has been very deliberate about taking its time, but now that Uber is out of the equation in Southeast Asia, it’s time to walk to walk and amp up the battle.