Grab began as an entry to a business plan competition — now, it has grown into a company with operations in 30 cities across six Southeast Asian countries: Malaysia, the Philippines, Thailand, Singapore, Indonesia and Vietnam. Launched in Kuala Lumpur in 2012 as the taxi-booking app MyTeksi (later renamed GrabTaxi) by Harvard Business School graduates Tan Hooi Ling and Anthony Tan (grandson to one of Tan Chong Motors’ founders), Grab’s wide range of services now includes GrabCar (booking private vehicles), GrabHitch (matching carpool drivers and riders), GrabBike (hailing motorcycle taxis) and GrabExpress (a delivery service).
With the ride-hailing market in Southeast Asia estimated to be worth US$2.5 billion last year and projected to hit $13 billion by 2025, according to a joint report by Google and Temasek Holdings, Grab is riding the wave of the booming business in the region.
The start-up entered Manila in August 2013, and Bangkok and Singapore two months later. Now, the latter is the company’s fastest growing market in terms of revenue and ride figures, says Lim Kell Jay, Grab’s Singapore country head. But the republic wasn’t part of Grab’s expansion plans from the start. “We thought our app worked well in a fragmented market, where there are many small taxi companies but no big ones,” the 32-year-old explains. “But here, you have ComfortDelGro and there are only five main operators.” As such, the team didn’t have confidence of the app’s success in Singapore.
“The quality of [taxi services here] is generally good compared to other countries, but an inadequate supply was an issue — during peak hours or when it rained, you still couldn’t get a taxi,” Lim says. However, investors were convinced the product was needed in the country.
Vertex Venture, the venture capital arm of Temasek Holdings, made the first investment, after which, GGV Capital put in S$15 million of series B funding in 2014. Last August, Grab received $350 million of series E financing from companies including sovereign wealth fund China Investment Corporation. To date, it has received total VC funding of $700 million.
Singapore has proven to be a strong market, Lim says, with each taxi making more rides than their regional counterparts, though the Philippines and Malaysia have more such vehicles plying the roads. Even then, the supply still fell short by up to 50 percent during peak hours, according to Grab’s calculations. To meet this demand, the company turned its attention to boosting its transient supply and, in mid-2014, launched its GrabCar platform, which mobilises private cars.
Grab has since established its headquarters in Singapore, setting up R&D centres here and in Seattle. “Singapore allows us to access talent, not just locally but globally,” Lim says. The higher labour cost is no deterrence. “You’ve got to pay for talent — we put US$100 million in the R&D centre [in Singapore] and now we have more than a hundred engineers and data scientists from all around the world.”
After dropping “Taxi” from the app’s name in January, Lim says it will continue to focus on growth in Southeast Asia: “The markets we are in, we want to go deeper. For example, in Singapore, there are about one million rides every day, but less than 20 percent are booked through smartphone apps by our estimates and that figure is lower in other markets. That shows the opportunity is huge.”
Making inroads into second-tier cities in this region is on the cards — besides capital metropoles, about 20 cities have populations exceeding 1 million. And experimenting with new services, such as GrabHitch, which the start-up recently launched in Malaysia, will keep the company nimble for years to come.
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