Tencent tips in $100 million funding round for China’s leading taxi-hailing app – is WeChat integration next?

Tencent tips in $100 million funding round for China’s leading taxi-hailing app – is WeChat integration next?

January 2, 2014

by Josh Horwitz

Chinese taxi booking app Didi Dache has started off the new year with a bang, receiving a fresh round of $100 million in funding, according to Tencent TechCitic PE is leading the series C funding round with a contribution of $60 million, while tech giant Tencent (HKG: 0700) follows with an investment of $30 million. In May 2013, Tencent gave $15 million in funding to the company.Didi Dache works like most other like-minded transportation apps in the US, though with some key differences. Chinese users in need of a lift can open the app and push a button requesting a ride, and drivers logged onto Didi’s system will in turn receive a notification. However, passengers can optionally add on tips of various sizes in an effort to entice the driver to come pick you up. Unlike Uber, the most-watched car-booking app on an international level, neither Didi nor the driver get to skim off the top of the payment. In most cases, transactions are conducted via cash.

Figures from iResearch show that Didi Dache is the leading taxi-hailing app in China as a whole, in terms of both registered users and daily bookings. Kuaide Dache, a Chinese taxi-hailing app that lets users pay for rides using Alibaba’s Alipay Wallet, trails it by about 30 percent for both metrics. Other competitors include Yongche’s Dache Xiaomi, Yaoyao Zhaoche, and a wealth of other players.

Despite iResearch’s figures, the Tencent Tech report describes the taxi-app battle in China as “in stalemate,” which has reportedly led Didi Dache to begin subsidizing its drivers up to RMB 100 per ride (about $16 US) to pick up passengers.

In addition to the usual horse-race suspense, Chinese taxi-hailing apps also have attracted media attention because on-demand taxi-rides could be the perfect gateway to get China’s smartphone users hooked on online-to-offline payments – a competitive space in the country. If Tencent’s investment sees WeChat integration with Didi Dache, the company will gain easy access to the messaging app’s 270 million monthly active users, and WeChat can get its users in the habit of paying for things using a messaging app.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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