Demonstrating just how difficult it will be for Uber to dominate the global market, another local competitor has scored a major funding round. Cabify, based in Spain, announced a $120 million investment Wednesday, with $92 million of it coming from Japanese web power Rakuten.
The company is being valued at $320 million, far more modest than the more than $60 billion valuation Uber is touting. The new money will be put toward expanding into Brazil and Argentina. The company’s services are already available in Spain (obviously), Peru, Mexico, Chile, and Colombia. The cities it covers include Madrid, Barcelona, Valencia, Tenerife, A Coruña, Malaga, Bilbao y Vitoria, Santiago, Valparaido, Lima, Mexico City, Queretaro, Monterrey, Puebla, Toluca, Bogota, and Cali.
The other big deal about this round is Rakuten’s commentary. Oskar Mielczarek de la Miel, a managing partner with the Rakuten FinTech Fund, told the Wall Street Journal that Cabify’s willingness to work with regulators made it an attractive investment. That is telling also since Rakuten is an investor in Lyft, which has seen just as much pressure in the United States to comply with local taxi laws as Uber.
This could be a sign that investors are wary of constant head butting with local laws, especially as financing seems to be seeing a crunch worldwide and the rideshare titan Uber is seeing its valuation downgraded by some of its investors, such as T Rowe Price.
Rakuten already has $300 million in Lyft, but started small with Cabify when it put in $3 million last year before the larger round on Wednesday. The expansion will likely cover cities São Paulo, Rio de Janeiro, and Buenos Aires. Cabify CEO Juan de Antonio told WSJ that the company was “actively looking for alliances with car manufacturers” without specifying which, also pointing to a similar growth strategy to Lyft’s (who raked in $500 million from General Motors in January).
With Rakuten’s input, it is likely de Antonio’s goal of joining the anti-Uber alliance (Lyft-Didi-Grab-Ola) will become a reality. For now, it needs to focus on growth and going beyond the 15 or so cities where it is seeing success.