Tuesday, April 8, 2014

Comments on Grabtaxi funding so far

This story caught my attention for a few reasons. First, i have heard much about Uber and how it has taken USA by storm. When i was in USA late last year, read an article about how Uber is able to price discriminate and set prices that reflect real time demand. Economic theory put into action finally!

Second is that i read about Grabtaxi a while back. Founder is the son of Tan Chong Motor family fame.
Anthony Tan, studied in harvard and started app in 2012 in Malaysia with about 500K USD funded entirely by family. Makes a lot of sense as it leverages on both the resources and equally important the network that the family already has in malaysia. Without knowing Anthony personally, i think this is a great model for 2nd generation to follow if they are keen in technology. Leverage on family business knowhow and tech to disrupt a space. Funding is a less an issue and they can do what i advocate which is to fund out angel round themselves.

Now they just raised more money from vertex. Previous round was also funded by vertex. Now some will ask why not just fund it all themselves? I think bringing on board a VC is a smart move. It forces discipline onto the company and founder and will also lend more credibility for subsequent rounds or acquisitions. And in this case, it also helps give them a good valuation benchmark to work on for future deals.

From what i can see, the number raised is not 10M as some tech news blog has mentioned but rather, this round is a further 3M USD raised which is far more consistent to a Series A round. I really wish our reporters can get their facts right before publishing. It distorts the industry unnecessarily and the company and founder usually will not want to or cannot (due to NDA) comment and such matters.To set record straight, it seems that the company Grabtaxi Holdings pl has raised 5.281M USD to date where Anthony and Family have funded the seed round of 518K and a further 4.7M USD from investors which includes themselves. Of this 4.7M, 20% came from vertex. So to date, Vertex has invested about 1M in GrabTaxi. The rest is all family money.

Based on above, it also means GrabTaxi is being valued at US$12-13M (using latest round 15+ per share x 800K+ shares) USD based on this April round. Of course, some may argue since founders self funded 80% of this round, this valuation is not accurate. I dunno, but at least Vertex agreed to it...

My guess is that most likely, family just wants a VC for credibility and discipline and connections but is unwilling to give up too much at this early stage. This is a UHNWI family based in Malaysia so while investing US$4M sounds like a lot, it probably is something they can afford to take risk with and aim for a much later exit.

Of course, i think their revenues are probably neligible at this stage. So looks like the ball is squarely in Anthony;s court now. I am rooting for them so succeed as a local ASEAN company as opposed to Rocket or Uber!

NB: So where did that 10M investment figure come from? That is the topic of my next post. Straits times and e27 quoted Anthony as saying it is 10m. I guess if in RM it is correct. Or maybe there are more tranches coming.

NB : to be rigorous, there is a myteksi sdn bhd which is a malaysian entity which Anthony and family funded 600K RM. Logically, this entity should be owned 100% by the SG holding company which Vertex invested in. However, i am unable to verify this since malaysian ACRA is slower and share updates are shown only 1 full year later.

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