A startup called Grab is winning ride-hailing turf in Southeast Asia—home to 600 million people, almost double the population of the U.S. The startup serves more cities in the region than Uber and, according to mobile-app analytics firm App Annie, is beating the world’s most valuable startup in the race for users here.
The region’s ride-hailing market is forecast to grow more than five times to $13.1 billion by 2025 from $2.5 billion last year, according to a recent report on Southeast Asia’s internet economy conducted by Alphabet Inc.’s Google and Singapore state-investment firm Temasek Holdings.
Singapore-based GrabTaxi Holdings Pte Ltd., as it is formally known, launched in 2012 and offers locally tailored services such as motorcycle taxis—a popular method for negotiating the region’s traffic-clogged cities—package deliveries and cash payment. It also has a pilot carpooling service allowing people living in southern Malaysia, where living costs are lower than in neighboring Singapore, to share rides into the city-state.
In four years, the company, valued at $1.6 billion in its most recent funding round last year, has expanded to 1,600 employees. It operates in 30 Southeast Asian cities—twice as many as Uber—in six countries.
It has raised $14 billion in debt and equity, providing it with a massive war chest for global expansion—and local turf wars.
Grab has also joined Didi, ANI Technologies Pvt.’s Ola in India and San Francisco startup Lyft Inc. in a global alliance of Uber rivals. They work together to allow users of each company’s app to hail rides from the other apps’ drivers in other countries.
Grab’s co-founder, Anthony Tan, a 34-year-old Malaysian who dreamed up the venture with a classmate at Harvard Business School, said he envisions the company as a sprawling, web-based platform, leveraging its location data to offer services beyond rides, such as digital payments.
In a region where few people have credit cards and many lack bank accounts, Grab first offered cash payments for users and drivers alike. It recently added motorbike taxis in cities like Ho Chi Minh City and Jakarta so commuters use can weave through traffic gridlock. Uber has since followed.
Grab also offers a package-delivery service designed to assist the region’s e-commerce startups, which sometimes struggle to get items to customers in places that lack traditional addresses or where roads are poor. Uber has a delivery service, but it isn’t available outside the U.S.
In Indonesia, Grab has worked to augment third-party maps by adding points of interest for pickups and drop-offs at locations not otherwise covered, like warungs—roadside stalls where people often congregate to buy goods or socialize.
Neither Grab nor Uber discloses user numbers, Grab says its app has been downloaded more than 15 million times.
Florian Hoppe, a consultant at Bain & Company, said “it’s hard for [Uber] to tailor to unique local requirements” in the region, while Singapore-based Grab understands what Southeast Asian consumers need. He pointed to Grab’s service connecting commuters in Malaysia to Singapore as an example.