China's Didi Raises Over $5.5 Billion in Record Tech Funding
(Bloomberg) -- Ride-hailing giant Didi Chuxing raised more than $5.5 billion from investors, scoring the largest round of funding ever for a technology company to bankroll an expansion beyond China and into driver-less technology.
Didi, which drove Uber Technologies Inc. out of China last year, is already one of the country’s best-funded private companies: its backers range from powerful state agencies to global venture firms and WeChat-operator Tencent Holdings Ltd. The latest financing, which Didi disclosed in an emailed statement Friday, may propel forays into everything from artificial intelligence to auto-financing -- and potentially markets beyond its home territory.
Didi, led by the 33-year-old Cheng Wei, didn’t reveal the backers who joined this round. People familiar with the matter said this week that the investors would include SoftBank Group Corp., Silver Lake Kraftwerk, China Merchants Bank Co. and an arm of Bank of Communications Co. The round was said to have raised the four-year-old startup’s valuation to about $50 billion, up from a previous $34 billion after its acquisition of Uber’s China business.
That price tag would surpass smartphone maker Xiaomi Corp.’s and make Didi the world’s most valuable startup after Uber. Didi amassed $10 billion in cash and equivalents last year, but the deal yields more ammunition as it prepares to challenge Uber and Alphabet Inc. in automated driving, and buys the company time to carve out new revenue streams.
Cheng founded Didi less than five years ago after leaving e-commerce giant Alibaba Group Holding Ltd. He and former colleagues started the business with financing from one of Alibaba’s ex-executives and initially launched the service in the southern metropolis of Shenzhen.
As the business took off, he won out over rivals through competition or acquisition. That culminated with last year’s acquisition of Uber’s China business, resulting in the U.S. ride-hailing company getting a 17.5 percent stake in Didi.
Having cornered the market for on-demand cars and taxis, Cheng is branching out into bus services and bikes, throwing his weight for instance behind one of the country’s largest bicycle-renting services, Ofo. On the global front, the company has formed an alliance with Grab in Southeast Asia and Ola in India, to thwart Uber in those regions.
Those forays outside of ride-hailing are becoming increasingly important as its main source of income comes under pressure from more stringent Chinese regulations governing driver qualifications.
Cities including Beijing and Shanghai have imposed stricter rules that require drivers to be local residents, cutting out thousands from the countryside who had been willing to take chauffeur jobs to make a better living. Still, Didi has won operating licenses in close to a dozen cities including Tianjin and Chengdu, affirming its right to legally operate in China.
Cheng and President Jean Liu hope that adopting driverless technology will help overcome such hurdles in the future. Didi wants to take advantage of data on 400 million users across some 400 cities to aid research into AI and autonomous vehicles. It opened an artificial intelligence lab in Mountain View, California last month, called Didi Labs. And it’s already lured dozens of stalwarts in the field including former Uber auto-security expert Charlie Miller, known for remotely hacking into a Jeep Cherokee in 2015.
Didi now counts more than 100 investors as backers including Tencent, Alibaba, Tiger Global Management and Chinese sovereign wealth fund China Investment Corp. Its latest round exceeds the previous record for a single tech-industry funding set by Ant Financial, an Alibaba affiliate, in 2016, according to London-based researcher Preqin.