Ride-hailing giant Didi Chuxing raised more than $5.5 billion from investors, scoring the largest round of funding ever for a technology company to bankroll an expansion beyond China and into driver-less technology.
Didi, led by the 33-year-old Cheng Wei, didn’t reveal the backers who joined this round. People familiar with the matter said this week that the investors would include SoftBank Group Corp., Silver Lake Kraftwerk, China Merchants Bank Co. and an arm of Bank of Communications Co. The round was said to have raised the four-year-old startup’s valuation to about $50 billion, up from a previous $34 billion after its acquisition of Uber’s China business.
Cheng founded Didi less than five years ago after leaving e-commerce giant Alibaba Group Holding Ltd. He and former colleagues started the business with financing from one of Alibaba’s ex-executives and initially launched the service in the southern metropolis of Shenzhen.
As the business took off, he won out over rivals through competition or acquisition. That culminated with last year’s acquisition of Uber’s China business, resulting in the U.S. ride-hailing company getting a 17.5 percent stake in Didi.
Having cornered the market for on-demand cars and taxis, Cheng is branching out into bus services and bikes, throwing his weight for instance behind one of the country’s largest bicycle-renting services, Ofo. On the global front, the company has formed an alliance with Grab in Southeast Asia and Ola in India, to thwart Uber in those regions.
Those forays outside of ride-hailing are becoming increasingly important as its main source of income comes under pressure from more stringent Chinese regulations governing driver qualifications.
Cities including Beijing and Shanghai have imposed stricter rules that require drivers to be local residents, cutting out thousands from the countryside who had been willing to take chauffeur jobs to make a better living. Still, Didi has won operating licenses in close to a dozen cities including Tianjin and Chengdu, affirming its right to legally operate in China.
Didi now counts more than 100 investors as backers including Tencent, Alibaba, Tiger Global Management and Chinese sovereign wealth fund China Investment Corp. Its latest round exceeds the previous record for a single tech-industry funding set by Ant Financial, an Alibaba affiliate, in 2016, according to London-based researcher Preqin.