Spanish Uber Rival Cabify Seeks to Expand in Latin America After Rakuten-led Funding Round
If you thought Uber already won the battle for supremacy in taxi apps, think again. Spanish rival Cabify just finished a funding round that packed $12 million more in its war chest, which it seeks to use in order to expand into more Latin American cities.
Cabify may not have the word-of-mouth of Lyft or the dominance of Uber in the U.S., but the startup has successfully battled against the Uber behemoth in its native Spain, as well as several cities throughout Latin America, for four years.
Now, in a deal announced Monday as reported by the Financial Times, Cabify has secured a Series B round of funding led by Rakuten, the largest Japanese e-commerce company.
The funding round adds $12 million to fund Cabify's expansion in Latin America, as well as adding investment clout to the startup, thanks to the funding round's high-profile leading investor: Oskar Mielczarek de la Miel, managing partner of Rakuten's investment arm, FinTech Fund, is joining Cabify's Board of Directors.
"We have been incredibly impressed with Cabify's stellar performance with such limited capital," said Miel, according to TechCrunch.
Even with the latest funding, Cabify has a relatively tiny cash reserve, especially in comparison to the unicorn startup that dominates ridesharing, Uber. According to Uber's CrunchBase entry, the San Francisco-based app launched in 2009 has received over $8 billion over the course of 14 funding rounds. Cabify, launched in late 2011, has accumulated a total in $23 million in three funding rounds, by contrast.
But as Miel noted, Cabify has done a lot with a little. In four years after launching in Madrid, Cabify has expanded into 11 cities in Mexico, Chile, Peru, and Colombia. And its revenues have risen quickly in recent years, from about $1 million in 2013 to $10 million in 2014, to an estimated $40 million now.
Founder and chief of Cabify Juan de Antonio expects revenues to climb close to $200 million next year, after the company's planned expansion backed by the latest funding round. "We have been growing in our markets for a while but with this new round of funding we can increase the density of our networks and enter new markets," said de Antonio to the Financial Times. "There are still virgin markets in Latin America."
One of the reasons Cabify has seen such steady growth in the fundamentals -- as well as fewer legislative setbacks in Europe and Latin America, as Uber has -- is that Cabify targets a specific clientele, while following the local city's rules regulating taxi services.
Cabify only operates where it can obtain taxi licenses and strictly follows local regulations regarding ride services, as opposed to Uber's slash and burn approach. It also puts an emphasis on corporate services and securing consistent, return customers, rather than pushing deep discounts to attract general population business away from established, local taxi services.
"Cabify's corporate offering significantly outpaces what incumbent players currently offer," said Beatriz Gonzalez of Madrid-based Seaya Ventures, which participated in the latest funding round as well as leading last year's $8 million Series A round. "This has allowed Cabify to dominate the corporate services market and attract heaps of corporate users, who as a group, actually hosts more revenues and less churn than private users."
Cabify will use the latest funding round will help the startup expand its services in the 11 cities in which it operates as well as to launch into 20 new cities in Latin America and Spain in the next eight months.
"Cabify has established leadership positions in markets across Spain and Latin America," said FinTech Fund's Miel. "We are really excited about their future and want to be instrumental in helping Cabify expand to other markets."