Uber throws $1B at India to fight off local rivals

According to the Financial Times, Uber will invest an additional US$1 billion into India’s rideshare market to bring its rides-per-day figure to 1 million by 2016.

At present, industry estimates put Uber at about 200,000 rides per day and Uber states that it is operational in a total of 18 Indian cities. Its largest competitor in India, Ola, claims to have 150,000 vehicles on the hook, in 100 different cities across the country.

Does this sound familiar?

Uber is engaged in a similarly heated struggle in China against industry incumbent Didi Kuaidi. Uber CEO Travis Kalanick revealed in a leaked letter last month that it was seeking to raise US$1 billion to expand operations in China. Rumours aside, both Didi Kuaidi and Ola are ahead in terms of market share – and Didi Kuaidi, at least, has no shortage of funds behind it.

Spread thin

If you follow the money, you’ll quickly discover that both Didi Kuaidi and Ola share the same investor in SoftBank. Does this mean a potential shared purpose for Ola and Didi Kuaidi? Perhaps as the battle gets drawn out it may become advantageous to them to pool resources?

Uber has managed to raise a total of US$10 billion so far and is estimated to be the most highly-valued private company in existence at a valuation of US$50 billion. An observation could be made that Uber, though seemingly ahead in the fundraising stakes, is stretched pretty thinly given that it operates in some 300 cities across the globe.

Both Uber and Ola are bleeding money at an increasingly quick pace, but Ola’s parent company ANI Technologies reports 2014 annual losses on Ola at substantially less at INR 34.21 crore (US$5.3 million) against Uber’s most recent figure of US$55 million.

As has been suggested by one Tech in Asia editor, perhaps the rideshare race might not be as quickly won over as was the case with social networking and Facebook. Physical networks take more investment and are slower to expand than virtual networks. Maybe it’s only a matter of time before Uber can leverage its network effects and patent store, in service of the more challenging markets ahead.

(Source: Financial Times)