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Softbank to invest $1.6 billion in Didi: CEO
Japanese conglomerate Softbank will invest an additional $1.6 billion in Didi, according to the company’s CEO. The move comes amid reports of the ride-hailing giant’s record losses in 2018.
“We’re investing $1.6 billion … as the additional investment to our earlier rounds,” Softbank CEO and founder Masayoshi Son said of Didi during an interview with CNBC on March 8. He did not specify whether the investment would come from Softbank or its venture capital arm Vision Fund.
Son said that companies in the ride-hailing industry are “growing so quickly,” while acknowledging that they had not yet made a profit.
A Didi spokesperson declined to comment on the latest investment pledge by Softbank when contacted by TechNode.
Softbank previously took part in a $4.5 billion funding round in Didi in 2016. It was also involved in a $5.5 billion round in the ride-hailing firm in 2017, alongside China Merchants Bank and the Bank of Communications, according to data from Crunchbase.
The Softbank announcement comes amid mounting financial and regulatory challenges for Didi. The company reportedly made a loss of nearly RMB 11 billion (around $1.6 billion) in 2018 as it shifted its focus from revenue to compliance following the murder of two passengers using its carpooling service.
Didi this year plans to lay off 2,000 of its employees, amounting to 15% of its workforce. During an internal meeting in February, Didi CEO Cheng Wei said some non-core businesses would be re-evaluated and cut back if necessary. The company plans to make additional hires to focus on compliance, driver management, and internationalization.
In September, Cheng said in an internal letter that the company had “never achieved profitability” since its founding.
Didi has faced public outcry and government scrutiny following the murders on its Hitch carpooling service, which has been suspended indefinitely. The company has been working to remove non-compliant cars and drivers from its network. As a result, Didi has had to commit additional capital to recruit qualified drivers and devote more resources to safety, both of which have had an impact on its finances.