Mark up one more sizeable round of funding for another regional startup that is rivalling Uber and other services in the world of on-demand transportation. , a ride-sharing app based out of Madrid and active in Spain and Latin America, has raised $120 million — money that it plans to use to continue building out its business on both sides of the Atlantic, starting first in Brazil and Argentina. It’s currently active in 14 cities.
The Series C round values the company at $320 million ($200 million pre-money), and it is notable also for who is investing. — the Japanese e-commerce giant that also and had invested in Cabify — is leading the round, with participation from others whose names are not being disclosed.
Juan de Antonio, Cabify’s CEO and founder, confirmed to me that the list of undisclosed backers does not include Softbank, or big strategics like Didi Kuaidi or Lyft, or any car companies, but that part of the company’s strategy going forward will be to work more closely with companies like the latter two.
Didi and Lyft, of course, are not strangers to that idea: they already work together, along with Ola and GrabTaxi in a sharing investors, tech and general learnings on how to scale up and compete against Uber. Notably, that group of strong regional players does not include a Latin American partner, nor a European one, at the moment.
“Two things I can concentrate on now that the funding has closed are establishing connections with other apps in other parts of the world, and looking for partnerships with car manufacturers,” he said. “We are both an opportunity and a threat for car companies as the idea of companies like ours replacing vehicle ownership becomes more of a reality.” This, indeed, appeared to be at least part of the logic for.
While Uber has disclosed more than $9 billion in funding to date to build out its service globally, what’s interesting is how relatively modest Cabify’s approach has been. Before today, the company had raised , and was essentially growing on its wits rather than subsidies from outside investors. (Previous investors included Seaya Capital and the Winklevoss twins.)
Considering the capital constraint, it’s impressive that up to now Cabify has grown as much as it has — 9-fold in terms of revenues in 2014 and 7-fold in 2015.
While that lean growth was what to Cabify, today it seems happy to let the money flow a little more freely.
“Cabify is rapidly consolidating its position with a very systematic and disruptive approach and Rakuten is passionate about empowering leadership in innovation. Cabify has an outstanding management team led by Juan de Antonio, whose vision uniquely places Cabify in a position to enter the next level of technological competition,” said Oskar Mielczarek de la Miel, MD at the Rakuten FinTech Fund, and a board member at Cabify.
Still, the fact that Cabify has managed to grow as much as it has on so little funding could be a good indicator of whether it will continue to develop, or falter as so many other small companies have done in trying to compete against Uber.
De Antonio said that Cabify is already profitable in some markets but not all, and the funding will give it some room to grow without having to concentrate only on that factor. Other competitors include companies like Hailo and MyTaxi in Spain; and in Latin America, Uber, EasyTaxi and other traditional cab companies.
But most of all, de Antonio says that the market is young enough in this region that the real competitor at the moment is the prospect of owning a cheap car to drive yourself. “Our true competitor is the concept of vehicle ownership,” he said.
One of the keys to Cabify’s growth has been how the company has chosen to market its service. Up to now, it’s been mainly about building relationships with customers that are more guaranteed to provide repeat rather than one-off business, such as corporate customers. As it scales, it will be interesting to see how it chooses to expand beyond this, and how that affects its margins and the wider cost pressures on the business: customer acquisition has been one of the biggest drains for companies like Uber.
De Antonio also says that it’s trying to grow in a sound, rather than at-any-cost, way in its wider business. That has included forging relationships with local businesses and doing all the paperwork and getting permits to remain legit; offering routes to e-hailing established, traditional taxis as well as providing — depending on the market — a way for regular consumers to transform themselves into Cabify drivers (the more well-known ‘ride-sharing’ P2P model).
This, however, seems to be a developing area and one that will not simply be resolved once and for all: currently Cabify and Uber are over complaints from some in the taxi industry that they are not working under the same regulations — a familiar tune that we have heard in other markets. In other words, the tensions that we’ve seen played out between the taxi industry and incumbent professional drivers, and companies that are disrupting the economics of that, also exist in Cabify’s world, and it will need to figure out how to navigate that longer term.
Above all, the modus operandi in de Antonio’s opinion is to do all this more or less as the anti-Uber — a measure of his ethics but perhaps one also of practicality, considering that it would likely be impossible to out-Uber Uber at this point without a monster war chest of funding.
“The ends do not always justify the means,” de Antonio said to me more than once in our conversation.
Cabify has also tried out a number of alternative transportation mediums — including the more gimmicky moves like helicopters and more practical, regional-specific ideas like rickshaws and boats — and will continue to explore ways of “loading” more than just passengers on to its drivers to maximise their revenues, de Antonio said.