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Ex-Citigroup Inc. banker Terence Zou started a carpooling app in Singapore to help cut road congestion, pollution and commuting costs. Now he’s in talks to raise money so he can bring that model to another crowded city — Hong Kong.
Zou’s Ryde Technologies Pte is in discussions to raise about S$10 million ($7 million) in new financing to help fend off rival GrabTaxi and prepare to take his app abroad. The discussions come two months after the company raised S$2 million in a seed round from Singaporean investors.
Ryde is trying to capitalize on the sharing economy by matching private-car drivers with commuters on a similar route. Riders pay according to the distance they travel, helping offset the high costs of car ownership and gasoline in cities including Singapore. Ryde wants to expand that model to Hong Kong because it has similar regulations — and traffic issues — as Singapore.
“We’re rushing to go to Hong Kong because we’re pretty sure that Hong Kong doesn’t have this service yet,” said Zou, 40, the service’s chief executive officer. He declined to name potential backers.
Ryde, which charges subscribers a flat annual fee of S$30, has signed up 20,000 members since its founding in September 2014, and Zou said he expects to have 50,000 members by the middle of this year. It’s capitalizing on the popularity of ride-sharing services that have sprouted up globally to meet growing demand in major cities.
Zou conceived his business idea after failing to hail a taxi during the Christmas shopping season two years ago. A passenger using the app enters an address and the time he or she wishes to be picked up. The app allows riders to make both advance or real-time requests, and drivers can also do the same with their offers.
Competition is heating up across Asia as deep-pocketed companies such as Uber Technologies Inc. step up investments. GrabTaxi Holdings Pte, the Southeast Asian unicorn founded by Malaysian Anthony Tan, has raised about $700 million and is soon starting its own carpooling service in Singapore.
“It’s an interesting idea but scaling would be a challenge, given the sheer number of options including Uber and GrabTaxi,” said Jame Osman, an analyst with Daiwa Capital Markets in Singapore. “Singapore is a small country, and Singaporeans tend to rely on public services.”
Zou, a Harvard Business School graduate who spent six years working at financial institutions including Citigroup Inc., counters that Ryde has an edge in being familiar with the needs of commuters in Asia’s costliest urban centers.
The cost of transportation in Singapore, named in 2015 by the Economist Intelligence Unit as the world’s most expensive city, is almost three times that in New York when prices of cars are factored in. About two-thirds of riders and three-quarters of drivers whom Ryde has surveyed cited cost as their motivation for using the app, Zou said. On the flip side, the city state’s estimated 619,000 private cars represent a readily available pool of potential Ryde drivers.
Ryde is now moving quickly given GrabTaxi’s arrival. Addressing a key concern of ride-sharing startups and their users, Zou has formed a partnership with Aviva PLC to insure drivers. The entrepreneur also says he’s made progress in convincing people of the benefits of sharing a ride since broaching his idea 18 months ago.
“Nine out of 10 people would say, ‘Are you crazy?’ and the tenth person would say, ‘What is carpooling?”’ he said. “We already have some traction, and the money will come in to help us realize our plan.”
This article was written by Yoolim Lee from Bloomberg and was legally licensed through the NewsCred publisher network.