Grab raises more money — again

Southeast Asia’s highest-capitalized startup is sitting on even more money from investors today after ride-hailing Grab announced it has raised $300 million from Invesco.

The deal takes Singapore-based Grab $7.5 billion raised to date. The money is part of its ongoing — feels-like-everlasting — Series H round which was started last June via a $1 billion capital injection from Toyota.

The round swelled to $4.5 billion thanks to contributions from a range of partners throughout 2018 and early 2019, then Grab said in April that it would add a further $2 billion to reach a $6.5 billion close before this year is out. This investment from Invesco is the first piece of that newest tranche to be announced, but there’s plenty happening under the surface, including a potential investment from PayPal, Ant Financial and others in a spinout of Grab’s financial services.

Grab declined to comment on the status of its Series H, and how much it has raised for the round so far.

Getting back to today’s news and, despite a relatively dry-looking announcement, there is an interesting takeaway to be found here.

Yes, this isn’t a SoftBank Vision Fund sized round — that $1.5 billion deal closed earlier this year — and it lacks the strategic significance of investments from backers like Toyota, or Microsoft, but it does represent a doubling down on Grab from Invesco.

The firm merged with emerging market-focused fund Oppenheimer back in May. Oppenheimer — which has close to $40 billion in assets under management for its developing market fund alone — was among the participants in an initial $2 billion raise for that Series H, and now the merged entity is coming back to increase its position.

That first deal (from Oppenheimer) was $403 million, Grab said, so this new addition takes its spend on Grab to over $700 million. It also comes at an interesting time for the firm, which is reported to have reorganized its management team following the completion of the merger.

Based on that clearing of the decks/realignment, the decision to double down on Grab is a positive validation for the ride-hailing company. While it might not be a household name to those outside financial markets, Grab president Ming Maa played up Invesco as “one of the smartest investors in developing markets” in a statement released alongside news of the investment.

Grab acquired Uber’s regional business last year to become Southeast Asia’s undisputed ride-hailing leader, but it perhaps didn’t reckon on its local rival Go-Jek mounting a bid to finally expand its service regionally.

Having built a strong presence in Indonesia — where it pioneered ‘super app’ concepts like services on-demand and payments in the context of ride-hailing — Go-Jek has since expanded into Vietnam, Thailand and Singapore, with the Philippines also in its sights. Those moves were fuelled by investment from the likes of Tencent, Google and Warburg Pincus . As it seeks to go further and deeper in those markets, Go-Jek is currently raising a round for growth that is expected to reach $2 billion, half of which it said it had secured in January.

That accumulation of cash seemed to spark a call to arms for Grab, which turned its Series H into a gargantuan rolling round after increasing the overall round target first to $5 billion and then to $6.5 billion.

Uber may have decided to leave Southeast Asia, but the ride-hailing industry in the region is still as fascinating as ever.

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Warburg Pincus announces new $4.25 billion fund for China and Southeast Asia

Warburg Pincus, the private equity fund with over $60 billion under management, is doubling down on Asia after it announced a $4.25 billion fund dedicated to China and Southeast Asia.

The firm has been present in China for 25 years, and it has invested over $11 billion in a portfolio of over 120 startups that includes the likes of Alibaba’s Ant Financial and listed companies NIO (a Tesla rival), ZTO Express (a courier firm)among others. The new fund will work in tandem with the firm’s $14.8 billion global growth fund which was finalized at the end of last year.

What’s particularly interesting about the new fund is that it has expanded to include Southeast Asia, where internet adoption is rapidly expanding among 600 million consumers, for the first time. It is the successor to Warburg Pincus’ previous $2.2 billion ‘China’ fund and, with the addition of Southeast Asia, it’ll aim to build on initial investments in the region that have included Go-Jek in Indonesia (although it is going regional) and Vietnamese digital payment startup Momo from its Singapore office.

Indeed, the firm’s head of Southeast Asia — Jeff Perlman — said in a statement that Southeast Asia is “exhibiting many of the strong investment themes and trends which have driven our China business over the last 25 years.”

While there is plenty of uncertainty around China, and more widely Asia, due to the ongoing trade battle with the U.S. — which has ensnared Huawei and other tech firms — Warburg Pincus said it had received strong demand for LPs whilst out raising this new fund.

Though it declined to provide details of its backers — and you’d wager that few, if any, are U.S-based — it said it surpassed its initial target of $3.5 billion for the China-Southeast Asia fund. That’s despite evidence suggesting that China’s investment space is experiencing a slowdown in total funding raised despite more deals.

In terms of target investments, the firm said it intends to focus on areas including consumer and services, healthcare, real estate, financial services and TMT — technology, media and telecommunications.

Warburg Pincus is already one of the largest investors in Southeast Asia in terms of potential check size, although it has been fairly selective on deals at this point. The fund’s move to include the region alongside will be a boon for companies looking for growth-stage deals that are hard to find in the current venture capital ecosystem.

More broadly, it is also a major endorsement for Southeast Asia as a startup destination. The region has long been seen as having immense growth potential, but it often sits in the shadows of more mature regions like India and China.

Warburg isn’t alone in grouping Southeast Asia with another region. Sequoia’s India fund reaches into Southeast Asia — alongside its recently-launched accelerate program — as does the most recent fund from Vertex Ventures.

On the other side, a number of Chinese funds are increasingly doing deals in the region and setting up shop in Singapore. Those include GGV which has backed startups like fintech company Thunes, Ant Financial-backed fund BAce Capital and ATM Capital, which helps Chinese companies expand into and localize in Southeast Asia.

Meanwhile, other funds are also stepping up to address the gap in later stage capital. B Capital, a firm led by former Facebook co-founder Eduardo Saverin, recently made a first close of over $400 million for a fund that’s targeted at Southeast Asia and other regions. Asia Partners is a maiden venture spearheaded by Nick Nash, the former president of Sea, that aims to tap into the post-Series B gap using a PE style approach that may be much like that of Warburg Pincus.

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Splyt wants to connect the world’s ride-hailing apps for easy international roaming

The vision of a universal global ride-hailing service is over. Uber’s decision to exit markets like China, Southeast Asia and Russia coupled with the failure of its rivals to develop a proposed roaming system, means that global travelers must install multiple apps if they are to take advantage of on-demand taxis. That’s unless a little-known startup can turn a bold plan into reality.

In the world of ride-hailing and its billion-dollar investment checks, an $8 million capital raise may not be a big deal but it does represent a coming-out for Splyt, a UK-based startup that is aiming to help make global ride-hailing roaming a reality — and not just within ride-hailing apps.

The four-year-old company announced this week that it closed an $8 million Series A round from a range of undisclosed (and existing) family offices and angel investors. In addition, the round included participation from Southeast Asian ride-hailing company Grab, the firm valued at $14 billion which acquired Uber’s regional business last year.

The deal will see Grab become a Splyt partner and it comes hot-on-the-heels of a similar rollout with Alipay, the digital wallet app run by Alibaba affiliate Ant Financial.

In both cases, Splyt is hooking Alipay and Grab up to its ride-hailing networks to allow users to book (and take) a taxi from another provider within the Alipay or Grab app.

Splyt allows users of Alipay to book taxis on the Grab network in Southeast Asia without downloading Grab’s app

The integration is already live within Alipay for Southeast Asia — Grab is scheduled to work overseas from early 2020 — and it means that users can book and manage rides directly from the payment app thanks to Splyt’s system. In other words, Alipay users can take rides through Grab without having to download the Grab app.

Splyt is not visible to the consumer’s eye. Instead, it lurks behind the scenes acting as the interconnecting services. In that respect, it is much like digital banking services that provide the infrastructure that enables banks to offer digital services. In Splyt’s case, it provides connections for ride-hailing services outside of their markets, but beyond them it allows other apps to access ride-hailing booking features, too.

Relationships are the key part of this offering, beyond Grab and Alipay, Splyt has partnerships with Chinese travel app Ctrip, Careem — the Middle East-based service being acquired by Uber — Gett and car rental service Cartrawler, which added ride-hailing via the tie-up.

“There’s a long way to go to get comfortable with where we are and how close we are to our vision,” Splyt CEO Philipp Mintchin said, admitting that the goal is for all major ride-hailing firms to join.

That said, the existing partner base already gives Splyt reach into some 2,000 cities. The deal with Grab, in particular, will help allow Alipay and Ctrip — two popular services — to open up ride-hailing in Southeast Asia, a region that is an increasingly popular travel destination for Chinese tourists.

Indeed, such is the focus on Asia at this point that Splyt has opened an office in Singapore. Mintchin told TechCrunch that he expects headcount in Singapore will reach 15 this year, mostly on the tech side, while overall the company is predicted to grow to 50 people by the end of this year.

“Most of our business and partners are based out of Asia,” he added of the new office.

Splyt Team

The Splyt Team at the company’s office in London

While connecting ride-hailing services and popular apps makes absolute sense for consumers who can enjoy the convenience of roaming, navigating and securing partnerships is not straightforward in today’s ride-hailing world. Aside from a network of complicated relationships — Uber and Didi, in particular, are investors in many competing services and each other — many companies are also developing new features behind simply taxis.

Mintchin declined to discuss potential deals but he did tease that Splyt is working to onboard a number of new partners this year.

“In this industry, everyone is talking to everyone,” he said of the partnership push.

Mintchin admitted that the “politics of the ride-hailing industry” mean that some companies refuse to work with others — no names named, alas — and others prefer to work with specific firms, too. Then there’s also an element of trust involved with giving a third party access to a service which ends up being used by yet another third party.

“We are here to partner and benefit each other rather than to try to steal a fleet and run our own app,” he said of Splyt’s neutral position and its role as the behind-the-scenes integrator. “We are not all of a sudden going to influence the partners we work with… the partners make decisions.”

It’s a patient game, but already Splyt is seeing growth double on a weekly basis since May. In some areas, Mintchin said that the service is seeing a 90 percent repeat use through its partners. Going forward, he added, the Series A funding will go towards closing those supply gaps to make the service more usable in more locations.

It’s an audacious vision but, given the balkanization of the industry in recent years, it remains the best hope that travelers have of delivering on the vision of using their favorite ride-hailing app anywhere in the world.

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Indonesia’s Kopi Kenangan raises a sweet $20M to expand its coffee business

Kopi Kenangan, a startup that wants to make quality, fresh coffee affordable to Indonesian consumers, has raised $20 million as it begins to consider overseas expansion in Southeast Asia.

The round comes courtesy of Sequoia India and Southeast Asia, via the $695 million investment fund it closed last year. Kopi Kenangan previously raised $8 million from Alpha JWC Ventures.

Started in 2017 by Edward Tirtanata and James Prananto, the company aims to bridge the gap between cheap street vendor coffee and drinks priced at the higher end of the spectrum from international chains such as Starbucks — the ‘sweet spot,’ you might say. That delta is a major reason why Indonesia, which is the world’s fourth-largest coffee exporter, has Southeast Asia’s lowest coffee consumption per person, Tirtanata argued.

Kopi Kenangan is also unashamedly local. Rather than lattes, mochas or flat whites, its top-selling drink is ‘Es Kopi Kenangan Mantan,’ a sweet Indonesian coffee that uses palm sugar, among other local Southeast Asian beverages. Ingredients are sourced locally, including four different coffee blends from across the country and organic palm sugar. Tirtanata told TechCrunch that the raw materials aren’t cheap, but they are essential for a “customer-first” company.

Already, Kopi Kenangan has an impressive retail footprint, including 80 stores across eight cities. The company makes use on-demand services like Go-Jek (GoFood) and Grab (GrabFood) which account for one-third of all orders, according to Tirtanata, rather than running its out fleet as some competitors.

Impressively, the business is profitable thanks to a managed inventory and a focus on waste that sees neighboring branches share resources. Tirtanata said that keeping the business sustainable is a key focus even though it is now flush with new capital.

A selection of Kopi Kenangan drinks

With this new funding under its belt, the company is eying significant expansion both nationally and internationally. Tirtanata said the plan is to reach 500 stores by next year, which, he claimed, will include locations in two overseas markets. He declined to name them, but did reveal that hiring is already underway in both countries.

As well as growing its commercial footprint, Kopi Kenangan will use the capital to build out its logistics to support the projected rise in business. (It claims to sell “close to” one million cups of coffee per month, up from 175,000 cups in October.)

Chief on the list is logistics to track coffee supplies and shipments — Tirtanata admitted it’s natural that there will occasionally be some beans that are sub-standard, and this will help root them out — using RFID and other tech. The startup’s development team is also poised to work on a new internet-of-things feature, details of which will come later, and improvements to the Kopi Kenangan apps and digital service.

Unlike newer competitors like Fore Coffee, which takes its cues from China’s Luckin by placing emphasis on digital delivery, Kopi Kenangan is content to use third-party on-demand apps and its own ‘new retail’ experience. Its app enables customers to pre-order coffee for collection at their nearest branch. If they are in an unfamiliar location, it will guide them to the store.

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Razer goes big on payments with Visa prepaid card

The latest pairing between a tech upstart and a financial titan is a digital prepaid card targeted at Southeast Asia’s 430 million-plus unbanked and underserved population.

On Monday, Razer, the Singapore-based company best known for its gaming laptops and peripherals, announced a partnership with Visa to develop a Visa prepaid solution. The service, which allows unbanked users to top up and cash out easily, will be available as a mini program embedded in Razer Pay, the gaming company’s mobile payments app. That means Razer’s 60 million registered users will be able to pay at any of the 54 million merchant locations around the world that take Visa.

Going virtual is the natural step given the region’s fast-growing digital population, but the pair does not rule out the possibility to introduce a physical prepaid card down the road, Razer’s chief strategy officer Li Meng Lee told TechCrunch over a phone interview.

Both parties have something to gain from this marriage. Hong Kong-listed Razer has in recent years been doubling down on fintech to prove it’s more than a hardware company. Payment services seem like an inevitable development for Razer whose users in the region are accustomed to buying in-game credits at convenience stores.

“For many years, the people who have been making digital payments before it became a sexy word in the last couple of years… [many of them] are the gamers who go to a 7-Eleven, pay in cash, and get a pin code to buy virtual skins for the games,” noted Lee. “Because of that, we’ve been able to build up more than a million service points across Southeast Asia.”

The key differentiator of Razer’s prepaid service, Lee said, is that customers paying at Visa merchants don’t have to already own a bank account, whereas that prerequisite is common for many other e-wallet services.

The Razer Pay app is handling transactions for a slew of internet services like Lazada and Grab and has made a big offline push, boasting a network of more than one million touchpoints through retailers including 7-Eleven and Starbucks where it’s accepted.

All in all, Razer claimed it processed over $1.4 billion in payment value last year — but that includes its “merchant services” business, covering on and offline payments, as well as Razer Pay.

The payment app first launched in Malaysia in mid-2018 and recently branched into Singapore as its second market. Lee said the service plans to roll out in the rest of Southeast Asia soon, upon which the Visa prepaid mini app will also be available in those markets.

For Visa, the tie-up with an internet firm could be a potential boost to its reach in the mobile-first Southeast Asia where some 213 million millennials and youths live.

“This is a great opportunity for us to be working with Razer in addressing how we work to bring the unbanked and underserved population into the financial system,” Chris Clark, Visa’s regional president for the Asia Pacific, told TechCrunch. “We will be doing some work with Razer on financial literacy and financial planning to bring that education to the population across the region.”

Razer’s fintech ambition has been evident since it announced to gobble up MOL, a company that offers online and offline payments in Southeast Asia, in April 2018. Besides payments, Lee said other microfinance services such as lending and insurance are also on the cards as part of an effort to ramp up user stickiness for Razer’s fintech arm.

Note: The original version of this article has been updated to correct that Razer’s $1.4 billion in GMV includes merchant services as well as Razer Pay.

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