Uber competitor Taxify has raised a massive $175 million to invest in global growth, with the Estonian founder singling out Australia as a high growth market for the business, writes The Australian Financial Review.
The company, which was founded in 2013 by then 19-year-old Markus Villig, targets markets in which a ride-sharing player has a monopoly and disrupts the market by offering cheaper fares and higher commissions for drivers, which it can do thanks to operating a leaner, more technology-driven model than its competitors.
In April, the company revealed to The Australian Financial Review, had attracted more than 350,000 riders across Melbourne and Sydney, only a few months after launching, with Melbourne its most successful launch city ever.
Villig said in Australia about 2 per cent of trips were completed thanks to ride sharing, with the majority dominated by private cars or public transport, but this would start to shift.
“We think we can go from 2 per cent to 10-15 per cent in the next 10 years. So there’s huge growth ahead and for that we need to be investing heavily,” he said.
“Currently the vast majority of the market here is still controlled by Uber, so both we and Ola Cabs have room to grow, without even taking into account the overall growth of the ride-sharing pool.”
In April, Uber launched its car pooling service in Australia which allows users to share rides with strangers and lower the cost of their fare.
Mr Villig said Taxify was also developing a similar service, which it intended to start trialling within the next two quarters.
He said the move to car pooling would be a major driver of expansion for ride sharing, as costs will come down to be more in line with public transport.
“We’ll start our rollout in a few African markets first, because in those cities most of the trips are already happening on small mini buses of up to 16 people, so they’re used to this type of transport,” he said.
“The line between ride sharing and public transport will be blurry.”
Taxify’s latest capital raise was led by the global automotive company headquartered in Germany, Daimler, with existing investor Didi Chuxing also participating in the raise, along with European venture capital fund Korelya Capital and TransferWise co-founder Taavet Hinrikus.
It would not reveal how much capital the company had now raised in total, having not disclosed
the value of its previous raise, but Mr Villig said this round was significantly larger.
In comparison, Uber has raised around $21.7 billion and Grab has raised $4.1 billion.
Didi, alongside major global venture capital fund SoftBank, have investments in most of the major ride-sharing players.
Mr Villig said this investment spread indicated that backers believe there is space in the market for multiple competitors.
“The opportunity ahead is really large and they’re not sure who will win, so they’re just making bets on many of these companies to ensure they have stakes in the winner.
“In the case of Didi, they have six or seven investments in all the regional players.”
Taxify has 10 million riders across 25 countries and 500,0000 drivers.
It employs 500 people globally, including 30 in Australia. With the new round of funding Mr Villig said he intends to grow the local team and potentially recruit engineering talent.
He also said the cash injection would enable the company to keep offering discounts to its Australian customers for the remainder of the year, as it builds up its user base.
“We’re definitely investing in the market to have discounts, but in the long term, as we improve our technology, the prices will come down organically as well,” Mr Villig said.
