A recent infusion of $100 million from Japan’s SoftBank gives Brazilian start-up 99 advantage over rival Uber in the Latin American market.
SoftBank has been focusing on technology investments of late, and announced recently that it is nearly finished raising its $100 billion Vision Fund, dedicated to the global tech sector. Chinese ride-hailing giant Didi Chuxing, also backed by SoftBank, invested in the Brazilian firm itself in January. SoftBank will join Didi Chuxing as a minority shareholder. Peter Fernandez, Chief Executive of 99, said the firm plans to use the capital to expand its peer-to-peer ride-hailing service, called 99POP.
Based in São Paulo, 99 was formed in 2012. The company originally worked with taxi drivers to provide an alternative to Uber. It continues to grow this business, but has shifted its focus to 99POP, launched in the fourth quarter of 2016. “The goal is to dominate Brazil and dominate peer-to-peer”, Fernandez said, noting that in São Paulo, 50% of 99’s rides are peer-to-peer. The company says it has more than 200,000 drivers and over 14 million registered users, the New York Times reports.
Fernandez, formerly head of mobile and social in Latin America for Google, joined 99 in January 2016. He was initially hired as Chief Product Officer by co-founder Paulo Veras, but was promoted to Chief Executive in October and charged with finding global strategic partners. The SoftBank funding is a major coup. “The fact that they’re coming in is a really big deal for the country”, said Fernandez. Regarding the obstacles to growth that start-ups face in the region, he added that “access to capital in Latin America is really difficult, and much more so than in the US, Asia or Europe.”
Fernandez said that SoftBank was undeterred by the uncertain political and economic climate in Brazil. “That does not affect the fundamentals of our business, because at the end of the day, there are 200 million people who still need transportation”, he said.
The booming ride-hailing industry is of course very capital-intensive. “We’re going to need to raise a lot more capital. This is just one step in a very long path ahead of us”, Fernandez said. 99 counts Monashees, Riverwood Capital, Qualcomm Ventures and Tiger Global Management among its earlier investors.