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)
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.
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.
Ryde’s previous fundraising efforts include a US$1.5 million seed round in November 2015 with undisclosed “strategic angel and private investors.”
In May 2017, Ryde founder and CEO Terence Zou told Tech in Asia that it had secured a further US$500,000 in seed capital but didn’t share details about the investors.
The startup also announced an undisclosed amount of investment in January 2019 from an entity called Nomad X, with the latter’s chief investment officer and director Tan Suanjin coming on board as Ryde’s chairman.
According to its most recent ACRA filing made earlier this month, Ryde has issued 414,200 ordinary shares with total paid-up share capital of S$4.77 million (US$3.4 million). Zou had the largest holding with 155,769 shares, followed by Garena Ventures – a subsidiary of New York-listed Sea Group – with 110,450 shares.
It isn’t clear when Singapore-based Sea, which operates ecommerce site Shopee and gaming platform Garena, invested in Ryde. While the ACRA filing seems to indicate that Sea owns a substantial stake, someone familiar with the matter told Tech in Asia that the company now considers its holding to be “negligible” due to dilution and other changes, suggesting its investments happened several years ago.
Share capital details filed with ACRA may not accurately reflect past investments as they don’t always take convertible debt and other modes of funding into account, or may not have been properly updated.
It’s also unclear if Nomad X’s investment is reflected in the ACRA filing. Tan left Ryde in November last year, according to his LinkedIn profile.
In April 2014, Sea – then known as Garena – began recruiting for Garena Ventures. The fund’s mission was to invest in Asian mobile and internet-centric businesses, with an aim to deploy eight-figure US dollar amounts in investments each year.
Currency converted from Singapore dollars. Rate: US$1 = S$1.40