MyTeksi bags over RM1 bil funding in 14 months

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IF my grandfather, who didn’t have any formal education, could start a sustainable business when he didn’t have much then or any support system for that matter, then what is my excuse really? So, I’d better start cracking,” says MyTeksi co-founder Anthony Tan.

And 32-year-old Tan sure did.

Upon graduation from Harvard University, the grandson of Tan Chong Group’s co-founder, the late Tan Sri Tan Yuet Foh, decided to chart his own path rather than take the more conventional and safer family business route.

Born and bred in Kuala Lumpur, Tan started MyTeksi in July 2011 and together with his team, expanded the mobile taxi booking service to become the largest in Southeast Asia.

The group, better known as GrabTaxi in the region, now has the largest network throughout Southeast Asia, with over 500,000 active users and 2.5 million mobile app downloads to date. It is the first mobile app to work seamlessly in all major markets in the region.

MyTeksi’s success is not just in terms of the number of users or app downloads but also the solid investment figures it has brought in.

Within a period of 14 months, the group has raised over RM1 billion in funding, boosted by a US$250 million (RM863.4 million) investment from Japan’s SoftBank Corp last week, which made the headlines.

The investment in MyTeksi group’s holding company, GrabTaxi Holdings Pte Ltd — which owns 100% of MyTeksi Sdn Bhd — will make the Japanese telecommunications firm the largest investor in the business.

SoftBank, which is led by billionaire Masayoshi Son, holds 32% of China e-commerce giant Alibaba, which has just had a hugely successful initial public offering (IPO) in the US, and now has a market capitalisation of US$269 billion.

Apart from the Japanese corporation, GrabTaxi’s investors include a unit of Singapore state investor Temasek Holdings and US investor Tiger Global Management. Tan declined to disclose his and other investors’ stakes in the group after the latest fund-raising exercise.

In an exclusive interview with The Edge, Tan says the funds raised will be invested into the business internally as well as to fuel growth in the region.

“We will continue to focus on the Southeast Asian region. You can expect to see us in more cities and that will happen quickly. In this game, we have to move fast. We are number one in the region and we want to maintain that lead,” he says.

Currently, MyTeksi or GrabTaxi is in six countries and 17 cities around the region. The other players in this taxi mobile app game are Rocket Internet’s Easy Taxi and US-founded Uber, an app that connects its users with private car rides.

“We know it will get more competitive so we want to be able to compete aggressively. We also want to beef up our human resource capabilities. We will invest in our talent and expand our team. We will invest in hiring the best and the brightest,” says Tan, adding that the team comprises 500 to 600 employees, most of whom are in their twenties and thirties.

When asked if the group is looking at an IPO exercise, he says, “It is an option… if we were to list, it will have to be on a substantial stock exchange where the investors are sophisticated enough to appreciate it. But at the moment, the group will focus on building its strength and presence in the region first.”

Tan adds that there isn’t a specific timeline just yet for an IPO. “The markets can be very irregular at the moment. We have to wait for the right time. As for me, there are no plans for me to exit any time soon,” he says.

The MyTeksi founder declined to disclose financial numbers but points out that the group is still in an aggressive expansion mode.

MyTeksi or GrabTaxi has brought about so-called “creative destruction” in the taxi industry in the region. It allows prospective passengers to order cabs and taxi drivers to obtain jobs closest to their location by tapping on the mobile phone app.

Passengers can check the drivers’ details and share vehicle locations with friends and family, while taxi drivers can choose and bid for the jobs that they want through the app. This helps them to save time and fuel rather than having to constantly drive around to look for clients. The app also estimates fares in advance for prospective passengers and taxi drivers.

The group currently operates in Singapore, Malaysia, Thailand, Vietnam, Indonesia and the Philippines.

In the past year, the number of taxi drivers using the app has grown 300% to 60,000. In addition, app usage has increased 500% year-on-year to about 500,000 users in the region on a monthly basis. The group estimates that there are three taxi bookings made through its app every second across the region, which is almost an 800% increase from a year ago.

The taxi-booking app was developed by Tan and his classmate Tan Hooi Ling as a business case study for the Harvard Business School’s 2011 Business Plan Contest, in which it won the second place. Tan then brought the idea back to Malaysia to build the proprietary system.

Starting a business for the app was no walk in the park.

“The drivers didn’t believe the app would work and even my parents didn’t understand it then. In the beginning, it was very tough. The standard replies by the drivers were, ‘You know, Anthony, many people have gone down this road before, go back to your family business,’” shares Tan.

“You have to understand where the drivers are coming from. In the early days, many parties tried and failed. Plus, the drivers didn’t understand how to use smartphones. Then you have passengers saying that taxi drivers keep cheating them by refusing to use the meter. The core of the problem was that the drivers didn’t make enough money. So, the solution was to find out how to help them make more money. Our platform aggregates all the business for the drivers into one app,” adds Tan, who personally explained and sold the idea to the taxi drivers.

Together with his team, Tan helped teach the drivers how to use the app and microfinanced the smartphones for them.

He believes the secret to making the app work is to bring enough advantages to both the drivers and customers.

“It is putting convenience, price and safety all onto one platform — a win-win for both sides,” he says.

This article first appeared in The Edge Malaysia Weekly, on December 8 - 14, 2014.