Brazilian Uber Rival Raises $100 Million From SoftBank
By Vinod Sreeharsha, New York Times
ByVINOD SREEHARSHA, A Latin American competitor to Uber — 99 — has raised $100 million from SoftBank of Japan to fuel growth, the Brazilian start-up’s chief executive says. SoftBank will become a minority shareholder in the privately held 99, as the ride-hailing service Didi Chuxing of China did when it backed the start-up in January. SoftBank is also a major investor in Didi Chuxing.
The transaction, which was completed last week when Peter Fernandez, 99’s chief executive, traveled to Tokyo and met with the SoftBank founder Masayoshi Son, puts another obstacle in Uber’s path to succeed in emerging markets. For SoftBank, the investment is a rare deal in Brazil and comes in the middle of political upheaval. The country’s president faces corruption accusations and his future is in doubt. That political uncertainty is expected to further delay the economic recovery here, needed after two years of severe recession.
Yet neither the recent volatility nor the past uncertainty appears to have scared away SoftBank. It was not a major concern of the company, Mr. Fernandez said. “The political and macroeconomic situation did not affect our discussion,” he said. “That does not affect the fundamentals of our business, because at the end of the day, there are 200 million people who still need transportation.” Mr. Fernandez joined 99, based in São Paulo, in January 2016, initially brought on board as chief product officer by one of the company’s founders, Paulo Veras. He was made chief executive last October, and his main task was to find global strategic partners. He was previously head of mobile and social for Google Latin America. Before that, he served as head of Latin America for AdMob, which was acquired by Google in 2009.
Mr. Fernandez said that 99 planned to use the new capital to expand its peer-to-peer ride offering, called 99POP, which it started in the fourth quarter of last year. The company, founded in 2012, initially focused on working with taxi drivers and was first called 99Taxis, providing an alternative to Uber. It continues to grow in that area, but it is now putting more effort into the POP service. “The goal is to dominate Brazil and dominate peer-to-peer,” the chief executive said. He noted that in São Paulo, 50 percent of the company’s rides are peer-to-peer. The company says it has more than 200,000 drivers and more than 14 million registered users.
Mr. Fernandez, though, understands that the sector is capital intensive. “We’re going to need to raise a lot more capital. This is just one step in a very long path ahead of us,” he said. Earlier investors in 99 include Monashees, Riverwood Capital, Qualcomm Ventures and Tiger Global Management. SoftBank recently announced it had nearly finished raising its $100 billion fund, the Vision Fund, for global technology investments. On May 22, SoftBank said it had completed a first close with over $93 billion committed. Investors include the Public Investment Fund of the Kingdom of Saudi Arabia, the Mubadala Investment Company of the United Arab Emirates, Apple and Qualcomm. It said it expected final closing to occur within six months. “The fact that they’re coming in is a really big deal for the country,” Mr. Fernandez said of the SoftBank fund. For start-ups maturing and trying to grow, “access to capital in Latin America is really difficult, and much more so than in the U.S., Asia or Europe,” he said.