Company: Didi Chuxing
Date Founded: 2012
Estimated Valuation: $56 billion
IPO Timeline: TBD, but expected mid-to-late 2019
Didi Chuxing has become one of the world's largest ride-hailing companies in barely four years, serving more than 300 million customers in 400 cities in China, the most populous nation, according to Bloomberg. Its success is one reason that its American rival, Uber Technologies Inc., was forced to withdraw from the Chinese market.
Didi offers a broad range of services for travelers including taxis, private cars, car rentals, buses and chauffeurs in its quest to move beyond traditional cab services. The company uses new technologies such as artificial intelligence to more efficiently deploy its resources. With these steps, Didi has expanded far beyond the mobile app used by ride-hailing companies worldwide.
Didi Was Built on Mergers
Didi Chuxing, the new name given to the company in 2015, was built on a spate of mergers going back to 2012. Didi competed aggressively against startups including Uber China. After Uber lost an estimated $2 billion in a market share battle, Uber brokered a truce with Didi Chuxing. Uber sold its China business to Didi and became a minority investor, while Didi invested $1 billion in Uber, according to Bloomberg.
Didi’s Financial Backers
Didi has raised significant amounts of capital to expand, a total of $10.24 billion in nine rounds from a variety of investors. Some of the larger financings include a $700 million Series D round led by Temasek Holdings, a $300 million debt financing led by China Life Insurance Co. and a $4.5 billion round involving undisclosed investors, according to Crunchbase.
Temasek Holdings, Singapore’s sovereign wealth fund, has made investments in companies such as Airbnb, Jet and Snapdeal. China Life Insurance has made multiple investments in Didi, including as part of the $2 billion funding round for Uber China, which later became part of Didi Chuxing.
Didi has Deep Management Ranks
The team behind Didi's success boasts alums from Goldman Sachs Group Inc., Alibaba Group Holding Limited and other enterprises.
Cheng Wei (born 1983) Co-founder and CEO of Didi Chuxing, was CEO of one of the two major ride-hailing companies that merged to become the future Didi Chuxing. He also has extensive technology experience. After graduating from Beijing University of Chemical Technology, Wei held several jobs before joining Chinese e-commerce giant Alibaba. Over eight years, he worked his way up to become vice president for Alibaba's online payment service, Alipay.
Jean Liu (born 1978), the company's president. is another executive who has been key to managing Didi's rapid growth. Liu, also known as Liu Qing, received a bachelors degree in Computer Science at Peking University and a master's degree in Computer Science at Harvard University. After working for Goldman Sachs for 12 years and becoming a managing director in Asia for the investment bank, she left for Didi. She rose rapidly, becoming the chief operating officer by 2014 and then president. She also oversaw Apple Inc.'s $1 billion investment in Didi.
There Was a Period of Significant Financial Losses
Numbers are scarce about the financial performance of Didi, a privately-backed Chinese company, but recently available data shows the company has struggled. Prior to the merger that ultimately became Didi Chuxing, both companies posted combined operating losses of $571 million in the first five months of 2015, according to Business Insider. Much of the losses come from driver payments and subsidizing trips for a total of $330 million. It seems that even such losses were not enough to curtail the atmospheric growth of the ride-hailing group.
The Future of The Company
Didi Chuxing has more than 5,000 employees and dominated more than 80% of the Chinese ride-sharing market as of June 2015, according to TechinAsia. Since renaming itself as Didi Chuxing in September of 2015, the company has partnered with other ride-sharing companies worldwide in an apparent quest to battle Uber for global share. Didi has invested $100 million in Lyft Inc., Uber's major domestic rival, forming a partnership to share technologies and marketing expertise.In January of 2018, Didi took control of Brazilian ride-hailing service 99. The company is expected to enter into IPO talks in late 2018, targeting a valuation over $80 billion.