Ride-hailing app earlier funded by Sea targets $7m in Octava-led round

Singapore ride-hailing app Ryde is looking to raise S$10 million (US$7.16 million) in an ongoing funding round.

Octava, a family office also based in the city-state, is leading the round with a commitment of S$2.3 million (US$1.65 million)

Photo credit: Ryde

Eric Koh, partner at Octava, tells Tech in Asia that the firm is backing Ryde because it’s among just a handful of companies poised to receive a ride-hail service operators’ license under Singapore’s new regulatory framework for point-to-point transportation, which will come into effect in June.

Grab and Gojek are also expected to obtain ride-hail permits, while taxi companies will get separate street-hail service operators’ licenses.

If it obtains the license, Ryde will be seen as a “credible” player and would be in “a good position to expand into other markets,” Koh says. The app is already available in Hong Kong, Kuala Lumpur, and Sydney, albeit on a small scale.

Mean and lean

Koh says Ryde’s financials and operational numbers show that it’s “running mean and lean,” as he claims that the company can be more cost-efficient than other operators.

Aside from a problematic foray into on-demand delivery, Ryde has remained focused on ride-sharing as its larger rivals have diversified into areas like financial services, food, and logistics. Tech in Asia understands that the startup employs about 30 people, compared to Grab’s 6,000 and Gojek’s 3,000-plus.

A person familiar with the company told Tech in Asia Ryde had S$30 million (US$21.5 million) in gross merchandise volume and S$3 million (US$2.15 million) in revenue in 2019.

In 2018, the company’s revenue jumped to S$984,000 (US$704,000) from S$15,635 (US$11,000) the previous year, driven mainly by commission from driver earnings and third-party bookings for partner taxi companies, according to filings with the Singapore Accounting and Corporate Regulatory Authority (ACRA).

However, Ryde’s losses widened from S$1.49 million (US$1.07 million) to S$3.37 million (US$2.41 million) over the same period, the filings showed.

Merger opportunity

News of Ryde’s latest funding round comes amid reports that Grab and Gojek are holding talks about a potential merger. Grab at the same time announced a bumper US$856 million injection of fresh funding from two Japanese investors: banking giant MUFG and IT firm TIS.

Ryde held a 1.2% share of Singapore’s ride-hailing market in 2018 in terms of completed trips, putting it in third place behind Grab and Gojek, which respectively had a 95% and a 3.8% share, according to ABI Research.

A merger between the two regional giants still seems a long way off, but if it does take place, “then Ryde gets promoted to number two in Singapore,” Koh says. With the biggest players in the market joining forces, demand for alternatives is likely to rise – similar to what happened after Grab acquired Uber’s regional operations back in early 2018. Though a Grab-Gojek merger would undoubtedly face high regulatory scrutiny, it could actually present an opportunity for third-placed Ryde to increase both its driver and rider numbers.

Sea’s stake