Chinese ride-hailing platform Dida Chuxing is seeking up to $300 million in pre-IPO funding from investors including Tencent, Chinese media reported Thursday.
- If able to raise the targeted amount, Dida is well-positioned to keep eroding Didi’s share of the market, which has been slowing along with the broader economy.
Details: Dida is looking to raise as much as $300 million in a last round of funding before filing for an initial public offering in the US, Chinese media reported Thursday citing people familiar with the matter.
- The company has been in talks with potential investors including Tencent with a pre-money valuation of $1 billion, the source said, adding that it is eyeing a US listing, though a date has not yet been set.
- The Didi rival expects to double the size of its business to 2 million orders per day this year. Currently around 70% of the traffic on its platform is for its carpooling service, which benefited from Didi’s nationwide suspension of its Hitch carpooling service following two passenger murders in 2018 by drivers. Dida’s carpool service increased tenfold in a year’s time as of mid-2019, according to the report.
- A spokeswoman from Dida Chuxing declined to comment when contacted by TechNode on Friday.
- Founded in 2014 by Song Zhongjie, a former HP executive, Dida provides taxi-hailing and carpooling services in 359 cities. Its user base of 5.64 million monthly active users (MAUs) as of December is one fifth the size of Didi’s, figures from Chinese mobile internet research firm Trustdata show.
- The company first claimed to be profitable in September, which it attributed primarily to its carpooling and value-added businesses including advertising, car maintenance, and auto insurance. A company executive said it charges RMB 1 to RMB 3 ($0.14 to $0.43) as a service fee from each carpooling order.
- Dida has so far recorded a total of four funding rounds including its latest, during which it raised an undisclosed amount from Nio Capital in March 2017.
- Its 2015 Series C raised $100 million, led by China Renaissance Capital Investment and followed by existing investors including Yiche, also known as BitAuto, a Nasdaq-listed auto information service provider formed by Nio founder William Li.
- Nio Capital is a mobility-focused venture capital firm formed by electric vehicle maker Nio, alongside Sequoia China and HillHouse Capital. Li has been the chairman of the Dida Chuxing board since 2018.
Context: China’s ride-hailing market has started to slow, reporting a 6.3% year-on-year decrease in total daily active usage in the third quarter of 2019, the fifth consecutive quarterly decline, analysts at Sanford C. Bernstein wrote in a report citing figures from Chinese research firm TalkingData.
- A reduction in user discounts and subsidies from ride-hailing platforms was the main driver for the decline, the report said.