Didi, the China-based ride-hailing giant, has raised fresh capital from a corporate investor. The $600 million investment from Toyota further pads Didi’s coffers as some of its global rivals are flush with IPO-related proceeds; Uber and Lyft, key ride-hailing players, raised billions each in their 2019 IPOs.
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For Didi, this is hardly its first corporate-sourced check. Didi has previously raised from Weibo, China Merchants Bank, Apple, China Life Insurance, Foxconn, and others. To see Toyota invest $600 million is not overly surprising.
There’s a bit more to the deal than simply capital, however; the transaction should allow Toyota to bolster its ties to China, a key market for cars. Here’s TechCrunch on the nuance:
“[T]he two companies will also set up a joint venture with GAC Toyota Motor to provide vehicle-related services to drivers on Didi’s ride-sharing platform.”
GAC (part of Guangzhou Automobile Group, according to the firm, which explains the acronym) has a partnership with Toyota called, you’ve already guessed it, GAC Toyota. The collaborative effort produced its millionth car back in 2011, to give you a scale of their co-work.
Now Toyota will have a fresh deal with a China-based car company and the key Chinese ride-hailing player. Not bad for the price of a check.
Didi is a good reminder of the high costs of ride-hailing. Indeed, as we reviewed its fundraising history this morning, we were surprised by how easy it is to forget how much money individual ride-hailing players have raised. Didi itself has raised tens of billions of dollars in debt and equity during its life.
Here’s a chart of just its known equity rounds (you can read the full list here if you want):
There is never enough capital for ride-hailing companies trapped between pricing struggles against rivals and consumer’s wallets and the chronic costs of self-driving car wagers. Though, many ride-hailing companies are looking to outside investors to fund their autonomous efforts. Didi’s reputation has also struggled after passenger assaults, government censure, and growth issues. Now with more cash aboard it has further time to get its ship straight and get public.
Recall the rumors that Didi could list in 2018? It’s looking more like a 2020 affair now at the soonest.
Illustration: Li-Anne Dias.