Google had stepped away from investing in ridesharing companies for a couple of years, but according to news of Indonesia, Google his diving back in headfirst with an investment of nearly $1.2 billion to support the largest Uber competitor in the region.
Go-Jek, one of the fastest growing rideshare companies in the world and a direct competitor to Grab and Uber, has opened up a new run of investment and institutional investors like Google are getting in on the action. In 2016, Go-Jek was able to raise $550 million from institutional investors – but this new round of investment led by Google is anticipated to more than double the capital that Go-Jek has to play with.
Currently valued at about $6 billion, Go-Jek stands toe to toe with Grab, a Singapore based ridesharing start that led a $2.5 billion around of investment in 2017. Uber remains the most popular ridesharing service on the planet (and the world’s most heavily funded private technology startup), raising more than $20 billion from investors in just the last three years alone.
It’s particularly interesting that Google is choosing to invest in ridesharing companies once again right now, especially since they invested so heavily in Uber just a few short years ago (and have been, by all accounts, instrumental in the success of the technology company).
On top of that, Google has recently had a bit of a frosty relationship with Uber after litigation between these two companies that was settled in 2016. In response to the litigation, Google helped to back the biggest US competitor for Uber in Lyft in 2017 – and it looks like they are doing the same thing abroad now.
Even more interesting, however, is the fact that Google is electing to directly invest in the Go-Jek company. This goes against the modus operandi of Google over the last few years, as they have almost always elected to do their investing in external companies through the Google Ventures subsidiary.
The tide may be shifting for how Google invests in companies, however. Last year, the company made it’s very first direct investment in an application startup based out of India. That investment was relatively small, especially compared to the investment they are making in Go-Jek, but it shows that Google is becoming a more active partner in companies in the economies of both India and Indonesia – two of the most promising emerging markets for technology and consumer services.
The CEO for Uber, Dara Khosrowshahi, has gone on record numerous times stating that the Southeast Asia region is unprofitable for ridesharing operations. However, with more than 600 million consumers in the region growth has been exponential – and many expect this industry to be more than $20 billion per year by 2025 (up from $5 billion in 2017).
Internal Google reports point to Indonesia being responsible for 40% of that revenue throughout Southeast Asia, making their decision to invest in Go-Jek more obvious. Go-Jek has already begun to expand their services available, opening up a dedicated shopping service to go with their mobile payments, traditional ride sharing service, and their motorbike/bicycle sharing operation.
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