INSUBCONTINENT EXCLUSIVE:
Nathan Lustig
Contributor
Nathan Lustig is an entrepreneur and managing partner at Magma Partners, a
seed-stage investment fund in Santiago, Chile.
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As the number of competitors in the ride-hailing industry dwindles, geographic expansion is
emerging as the next proving ground to determine who will be the victor in the ride-hailing market.
The race for control of the industry,
which is estimated by Goldman Sachs to grow eightfold to $285 billion by 2030, is escalating with China Didi Chuxing already surpassing
Uber as the most valuable startup in the world
With a recent valuation of approximately $56 billion, compared to Uber $48 billion, Didi is posing a real threat to Uber operations and
shows no signs of slowing down
Cementing its position as the top ride-hailing service in China, Didi is now turning its attention to another region of the world that is
still filled with vast opportunities and not yet dominated by a single taxi alternative: Latin America.
While many ride-hailing and sharing
services have already sprung up and faced regulation in cities across Latin America such as Mexico City, Montevideo, and São Paulo, the
region still presents an enormous opportunity for the companies that can adapt and move fast enough.
The current opportunities in Latin
America
Unlike many other regions of the world, Latin America is still very much reliant on traditional forms of public transportation such
as buses, trains, and subway systems
What more, larger cities such as São Paulo, Mexico City, and Bogota simply cannot support any more vehicles on the road without an
Large metro areas are already at or above maximum capacity during peak hours, making owning and commuting with a car more of a hassle than a
As a result, many commuters across Latin America are putting less importance on owning a vehicle and opting to use alternative modes of
transportation and on-demand services instead.
Beyond the rising demand for alternative transportation options, it also worth noting that
Latin America is the world second-fastest-growing mobile market
In a region of approximately 640 million people, there are more than 200 million smartphone users
By 2020, predictions say that 63% of Latin America population will have access to the mobile Internet
Latin American smartphone users have quickly adopted global apps, such as Uber and Facebook
However, tech companies have yet to fully tap into the region potential.
Chilean taxi drivers demonstrate along Alameda Avenue against US
on-demand ride service giant Uber, in Santiago, on July 10, 2017.Uber smartphone app has faced stiff resistance from traditional taxi
drivers the world over, as well as bans in some places over safety concerns and questions over legal issues, including taxes
(MARTIN BERNETTI/AFP/Getty Images)
The key players
Uber
According to a Dalia survey, Latin Americans with smartphones that live in urban
areas are the most likely to have used a ride-hailing app or site
Overall, 45% have used an app, with Mexico taking the top position in the region at 58%.
Uber entered Latin America in 2013 and claims to
have more than 36 million active users in the region, proving employment for more than a million drivers
The company quickly dominated Mexico, which is now its second-largest market after the United States In fact, up until recently Uber
claimed a near monopoly on ride-sharing in Mexico with few competitors
Uber also has operations in more than 16 Latin American countries.
99 (formerly 99Taxis)
With an urban population of approximately 180
million, Brazil is the ultimate prize for ride-hailing and taxi companies with several services competing for market share
Most notably, 99 (formerly &99Taxis&) was able to gain momentum early on with exclusive services that extended beyond basic ride-hailing
(such as its 99 TOP and 99 POP services) and better tools for its drivers.
With over 200,000 drivers and 14 million users, 99 attracted the
attention of investors worldwide, including that of China Didi Chuxing
Didi invested $100 million into 99 in January 2018 before acquiring 99 entirely months later for nearly $1 billion to take on Uber in Latin
America, shortly after it acquired Uber operations in China.
Easy Taxi
Rocket Internet -backed taxi booking service, Easy Taxi, started in
Latin America in 2011, two years after Uber first started in San Francisco
The company provides an easy way to book a taxi and track it in real-time
Today, the company is owned by Maxi Mobility, which acquired the company from Rocket Internet in 2017 for an undisclosed amount
Maxi Mobility also owns Cabify, and operates across many Latin American markets, including Argentina, Mexico, Bolivia, Panama, Brazil, Peru,
and Chile, in addition to a handful of markets elsewhere.
To solidify its position in the region, Easy Taxi merged with Colombian
taxi-booking app Tappsi in 2015
Tappsi launched in Bogotá in 2012 and was doing quite well in the Colombian market
The merger allowed the companies to pool their resources just as other competitors, such as Uber, began entering the region.
Easy Taxi
maintains impressive traction, raising more than $75 million to date
But as the ride-hailing battle in Latin America pushes forward, the company is rumored to be a likely investment or acquisition target for
Uber, Didi, or the largest global investor in this space, Softbank.
Cabify
Cabify is a Spanish company that provides private vehicles for
hire via its smartphone app
Although founded in Madrid, Cabify has always positioned itself as a Latin American company, investing heavily across the region
The company was able to gain a strong foothold due to some significant funding raised by its parent company, Maxi Mobility
In January 2018, Maxi Mobility raised another $160 million and said the funding would be used to accelerate both of its companies, Cabify
and Easy Taxi, in the 130 cities where they operate throughout Spain, Portugal, and Latin America.
Cabify reported it has over 13 million
users and grew its installed-base by 500% between 2016 and 2017, tripling its user base and fulfilling six times more trips in 2017.
Cabify
competes directly with Uber, 99, and Easy Taxi in Brazil; however, it reportedly has around 40% market share in Sao Pãolo, one of the
largest cities in all of Latin America.
Smaller players to watch
Beat (Formerly Taxibeat)
Beat is a profitable ride-hailing service
founded in Athens, Greece that also operates in Peru
Beat is slowly expanding its operations across Latin America, though expansion appears to be limited to Chile for now.
As of January 2017,
Beat had around 15,000 drivers and 800,000 customers in Peru.
Nekso
Toronto-based Nekso bet on the Latin American taxi-hailing market before
its home market with a pilot launch in Venezuela in 2016
Nekso was able to gain acceptance from the taxi industries in Venezuela, Dominican Republic, Ecuador, and Panama with its slightly different
approach to ride-hailing.
The company connects a network of 550+ licensed taxi companies with thousands of drivers and allows users to flag
down a cab off the street and without using in-app requests
Nekso also uses artificial intelligence technology to offer drivers real-time updates on weather, events, and traffic data to predict areas
of a city which may need more drivers
The company claims taxi drivers can spend up to two-thirds of their day looking for or waiting for riders and that Nekso technology helps
drivers increase their daily rides by more than 25% percent.
At the end of 2017, Nekso boasted around 150,000 users and facilitated
approximately 400,000 rides per month
Now, the company plans to make its debut in Canada as well as expand to more countries in South America, including Argentina, Colombia,
Chile, and Peru.
Didi, 99, and the next phase
99 new owner, Didi, which dominates the Asian market and was able to defeat Uber in China, has
big plans for international expansion
Its acquisition of 99 reveals the potential it sees in Latin America but also adds to the complicated web of global ride-hailing
services.
After Didi shut down and acquired Uber assets in China, it also bought a stake in Uber for $1 billion
Uber, Didi, and 99 are all backed by Softbank
However, everywhere outside of China, Didi and Uber are competing with each other
Didi full plans for 99 are not yet obvious, but the company has already set up an office in Mexico and begun poaching staff from Uber in
Mexico.
With an infusion of capital, Latin America ride-hailing industry is multiplying
That said, companies that want to compete in the region will need to use an aggressive and strategic approach that can withstand the
uniqueness of commuters and transportation options in the region
It only a matter of time until we see if these companies continue ramping up their operations for geographic domination, or if we see more
and more partner up to advance their technologies and address other looming threats & such as bike sharing, scooter sharing, and even
autonomous vehicles.
Two of the founders of 99, who sold their company to Didi, have already launched a dockless bike sharing startup called
Yellow in Brazil and raised $9 million to grow its operations
No other scooter company has taken the plunge into Latin America yet besides Grin Scooters in Mexico City, but other larger cities such as
Buenos Aires, Bogota, Santiago, and Lima would be ideal markets if the companies can figure out pricing as well as security and safety
issues first.
Didi activity in Brazil and Mexico is sure to trigger a new wave of competition between existing ride-hailing players and
create an even more tangled web of alliances and acquisitions
Whether or not these companies can adapt and move fast enough to rise to the top, and deal with the other looming alternative modes of
transportation, remains to be seen.
