Grab is on track to generate about a billion dollars in revenue this year from ride-hailing alone and is likely to double that next year and continue booming.
That's the view from the inside track as the six-year-old start-up continues to set a dizzying pace ahead of the start of the Singapore Grand Prix.
"By next year we expect our core ride-sharing business to double in size,” Grab president Ming Maa said in a speech to the Asia PE-VC Summit in Singapore as the city got ready to shut down roads and get the Marina Bay Street Circuit ready for qualifying.
“Given the low penetration rates in Southeast Asia for ride sharing, we can easily see that increasing by three, four or five [times]," Maa went on.
Grab, including its payments and food delivery services, broke over the billion-dollar revenue run rate earlier this year. On Tuesday, Maa said that figure was now “well above a billion”.
Grab has been laser-focused on ride sharing over the past three years because it saw that vertical as the largest market opportunity available.
Southeast Asia’s densely populated cities, low car ownership and poor public transportation infrastructure makes “Southeast Asia the perfect sweet spot for ridesharing”, Maa said.
The start-up that forced Uber to pull back from Southeast Asia started its H-round of fundraising in April. Within four months, it closed on $2 billion of capital from some of the world’s most well-heeled investors to fund the group’s expansion across the region and into different services.
WELL-FUNDED ECOSYSTEMS
On top of that, Grab has gathered commitments from investors on another $500 million and expects to close on a little over $3 billion in total by the end of December, Maa told FinanceAsia last month.
“One of our core strategies is to make sure we always raise over three times that of other companies in the region [and] that provides us with the firepower to execute our vision,” said Maa.
Arch-rival Go-Jek of Indonesia has also spotted the regional growth opportunity for apps and some Grabbers view the competition as a zero-sum race to the checkered flag.
Go-Jek said in May that it would invest $500 million to enter Vietnam, Thailand, Singapore and the Philippines, starting with ride-hailing but ultimately expanding into other services.
Investors appear keen to back the largest players in the digital economy who benefit from network effects to propel them even further ahead of their competitors.
“All the ecosystem players are actually sitting with a ton of money,” Vijay Shekhar Sharma, the chief executive of India’s largest payments firm Paytm, said also at the summit.
Due to the ease with which capital can be raised in private markets Sharma said that Paytm has no plans to go public – "not in three years, not in four years."
Just when Grab might be tempted with its own initial public offering was not something Maa was prepared to be drawn on.
QUALITY NOT JUST QUANTITY
However, Maa added that the key to keeping the capital rolling in from private investors was to demonstrate the quality of your financial accounts and not just things like gross merchandise volume (GMV), which measures the total volume of transactons sold over a site.
“This entire industry, because the fundraising environment is so positive, is focused on vanity metrics – who has the biggest GMV?” Maa said.
As part of this Grab aims to bring down fraud in its small but fast-growing payments business.
“We’re well below 1% on our system, if you look at some of our competition their fraud rates are as high as 20% to 30%,” said Maa, who is a former Goldman Sachs banker.
Not that it's been a completely smooth ride for Grab in its efforts to grab pole position.
The company is fighting a provisional finding on July 5 by Singapore's Competition and Consumer Commission that the move to buy Uber’s regional operations substantially reduced competition.
