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For a while Uber looked set to conquer world of car rides but it’s no longer the only one in the fast lane. Sally White reports

Who'd have thought there was room left for more in the ride-hauling market! One smart investor who thinks so is Japanese internet giant Rakuten. It has just invested $92m in a move that shot the recipient, Spain's Cabify, to overnight fame. That comes on top of Rakuten's participation in a $1bn funding for the US taxi group Lyft.

In fact, the market now seems much wider open than predicted not so long ago when it looked as though Uber would take all. Just last week Uber settled a class-action lawsuit that threatened its business model at home in the US and the challenges mount overseas. On Wednesday, New Delhi became the latest Indian city to say it will ban aggregators from using ‘surge pricing’, the practice of charging more in periods of high demand.

In India Uber is slanging it out with local group Ola, and but each has yet to make a profit even though, as the Financial Times commented, investors continue to pour money in. In China Uber is spending $1bn a year to compete with local rival Didi Kuaidi, which is backed by internet giants Tencent and Alibaba. Didi may have lost three times its revenues last year, according to analysts.

…the market now seems much wider open than predicted not so long ago when it looked as though Uber would take all

The Financial Times echoes the disenchantment with Uber that seems to be spreading regarding this onetime tech darling. Though a valuation of over $62 billion still hangs over it, US investment firm T.Rowe Price has just said that as far as it is concerned, its analysts have knocked that down by 6%.

"Uber may be able to operate profitably, as it claims, on its home turf, where capitalist forces have more sway over outcomes. But unless it can learn to navigate less logical overseas markets, it risks becoming a one-hit wonder," says the Financial Times editorial.

Cabify seems to have escaped being vilified, even though it has been around since 2012. Maybe because it has kept its head down below the barricades until now. What interests Rakuten is not Cabify's Spanish base, but the overseas expansion. Cabify operates in Spain, Mexico, Chile, Colombia and Peru. It plans to use the funding to expand into major Latin American cities including São Paulo, Rio de Janeiro and Buenos Aires, as well as some new cities in Europe.

Keeping an eye on promising trends

What investors like is that Cabify always seems to have an eye out for business that would help its drivers make more money (Uber has been criticised for putting its drivers in second place to users). The latest is a plan to deploy to develop a parcel-delivery service in its new markets.

What investors like is that Cabify always seems to have an eye out for business that would help its drivers make more money

Juan de Antonio, Cabify’s CEO and co-founder, is reckoned to be a smart guy. Ex prestigious US business school Stanford and then leading international consultancy, The Boston Consulting Group, he has steered Cabify well. Firstly, he pitched on the successful niche of high-end cars, and he seems to have moved into new areas profitably.

Another idea is to link up with car manufacturers - again picking up on a promising tend. In January, General Motors became the first major carmaker to partner with a ride-hailing company and invested $500 million in Lyft. This partnership includes renting GM vehicles for an affordable price to some Lyft drivers. Carmakers are responding to trends such as autonomous driving and ride sharing on the grounds that they could change the current model of car ownership. Mark Fields, Ford Motor CEO, says carmakers' business focus is shifting to vehicle miles travelled instead of number of vehicles sold.

Besides partnering with carmakers, Cabify is also eager to join an alliance of ride-hailing companies that already includes Lyft and Didi Kuaidi, de Antonio said. The alliance allows users of each app to order rides when travelling overseas by using their home country’s app.

“Cabify is rapidly consolidating its position with a very systematic and disruptive approach and Rakuten is passionate about empowering leadership in innovation. Cabify has an outstanding management team led by Juan de Antonio, whose vision uniquely places Cabify in a position to enter the next level of technological competition,” Oskar Mielczarek de la Miel, MD at the Rakuten FinTech Fund, and a board member at Cabify, told a press conference. Rakuten has invested a few million before, but the latest mega-sum is an indication of its confidence in the Spanish group. 

Cabify has managed to grow extremely impressively to date - nine-fold in terms of revenues in 2014 and seven-fold in 2015, according to TechCruch. That it has done so on so little funding could be a good indicator that it will continue to develop.

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