China's Uber for Trucks Is Said Close to Up to $1 Billion Round
(Bloomberg) -- Full Truck Alliance Group is close to securing as much as $1 billion in new funds to replenish its war chest and jumpstart an expansion into driverless technology, according to people familiar with the matter.
China’s biggest online marketplace for long-haul deliveries is in advanced negotiations with new and existing backers including SoftBank Group Corp. and Tencent Holdings Ltd. on a funding that could hike its valuation by as much as 40 percent to $9 billion, the people said, requesting not to be named discussing private deals. But that’s lower than an initial target of $10 billion, reflecting cooling sentiment toward tech companies, the people added.
Truck Alliance, created by the merger of Huochebang and Yunmanman last year, is building up its marketplace to connect millions of mostly independent truckers. Led by Chief Executive Officer Wang Gang -- an angel investor in ride-hailing giant Didi Chuxing -- it’s trying to bring a fragmented, 5 trillion yuan ($720 billion) arena into the smartphone age. It now wants to get into autonomous vehicles: Truck Alliance recently invested in plus.ai, a Silicon Valley driverless truck startup valued at almost $1 billion and backed by Sequoia Capital, one of the people said.
The Wall Street Journal this month reported Truck Alliance was looking to raise $1 billion at a $10 billion valuation but that investors were skeptical. People familiar told Bloomberg that the new round was close to getting finalized.
Truck Alliance -- known also by its Chinese name Manbang -- is proposing a sharply higher valuation based on an estimated 13 billion yuan of revenue this year, one of the people said. It’s also promising its backers as much as five-fold growth in 2019 sales, the person added. Truck Alliance declined to comment.
Long-haul trucking, with its hours of cruising in relatively simple highway environments, is a key opportunity to deploy automated vehicles. Major manufacturers from Daimler AG to Paccar Inc. are working on self-driving systems for commercial trucks. The field has also attracted startups such as Intel Corp.-backed Peloton Technology Inc., which helps automated trucks safely travel in formation.
Guizhou-based Truck Alliance, which raised $1.9 billion at a valuation of $6.5 billion in April, counts Capital G, Sequoia, GSR Ventures and Hillhouse Capital among its other investors. It’s among a handful of startups seeking funds at the tail end of China’s unprecedented tech boom without having to swallow a down-round, or funding at a lesser valuation. Easy money is drying up amid a slowing economy and nationwide deleveraging campaign, while U.S. tensions are fomenting caution among investors who increasingly bet only on a shrinking pool of elite startups. The wariness is extending into public markets as well: smartphone maker Xiaomi Corp. and internet services giant Meituan Dianping have both slumped since their recent debuts.
Truck Alliance generates revenue from membership fees paid by customers such as factories that use its platform for long-haul service. It also makes money from taking a cut of truckers’ shipping fees and highway toll-card top-ups, and when truckers use its online payments system to buy gasoline.
It’s using technology to streamline processes and boost efficiency in an industry where trucks can stand empty for hours and drivers rely on typically chaotic service centers to find their next load. As of August, the company had more than 1.5 million paying customers and 5.2 million truck members who use its platform for free, the company said in a statement. It’s linked more than 3,000 gas stations across the country, bringing business to under-utilized outlets in return for diver discounts.
Truck Alliance has issued 1.55 million toll cards as of August, processes 130 million yuan of top-ups daily and handles 1 billion yuan of gas purchases through its system monthly, according to the company. And its financing arm has helped 580,000 drivers access 6.5 billion yuan of loans, it said.
Read more: China’s Top Uber-for-Trucks Apps Merge to Create Industry Giant
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