iMENA invests $7 million in Rocket Internet's ‘Easy Taxi’; here's how it plans to compete in Saudi Arabia
Jordan-based regional investment firm iMENA announced today that it has
invested $7 million in Rocket Internet's Easy Taxi, allocated to expand its
mobile taxi-ordering service (think Rocket's version of Hailo) in the Middle East.
iMENA, which prefers
a path to a majority stake in most of its portfolio companies,
wouldn’t disclose the amount of equity secured, but Khaldoon
Tabaza, iMENA’s managing director, confirmed that only iMENA and
the global Easy Taxi entity jointly own the new regional Easy Taxi
entity.
Easy Taxi, which launched in 2011, currently operates in 15
markets, in Latin America, Africa, and Asia, where it allows users
to open up a mobile app, enter their location, and order a taxi on
demand.
To fuel its rapid expansion, it's already raised $30 million:
$10 million from Rocket
Internet and Africa Internet Holding in July, $15 million
from Latin America Internet Holding in June, and $5 million in seed
funding from Rocket Internet late last year. Yet this $7 million is
exclusively focused on the company's expansion in the Middle East
(implied: this might be the only portion of Easy Taxi's funding
focused on the Middle East).
The move is iMENA’s second tie-up with a Rocket company, after
investing $8
million in HelloFood last month. Although iMENA is pouring
capital into Rocket properties, it doesn’t have an overarching
investment agreement with the German entity, says Tabaza: the two
“work closely with one another."
As with HelloFood, Rocket isn’t
wasting time as it goes for a land grab in Saudi Arabia. Easy
Taxi hasn't officially launched, but is in beta mode in Saudi, says
Eyad Alkassar, the Managing Director for Rocket Internet in the
Middle East. The plan is to expand throughout the GCC, and possibly
Jordan and Lebanon. Conspicuously absent is the market inspiring
the most
taxi service and traffic-measuring
apps lately: Egypt.
Easy Taxi has already arrived in Saudi ahead of global rival
Uber, the San Francisco based
car-ordering mobile app that just launched in the UAE,
adding Dubai to the 54 cities it serves around the globe. (Hailo,
the taxi app that Easy Taxi more closely resembles, has not entered
the Middle East).
Uber’s local rival, Careem,
a car-ordering mobile app launched out of Dubai, is already in
Riyadh, growing 50%-60%
month-on-month since it launched this summer.
Alkassar shrugs off the competition. "Careem and Uber are in the
limousine sector, but we are focusing on taxis. Taxis are a bigger
market, and a different market; they are not really
competitors."
To suggest that two car-ordering services won’t compete in the
Saudi market sounds like a quick dismissal; on the ground, Easy
Taxi's model is very similar to Careem's. The Rocket company works
directly with local drivers, not partnering with a specific taxi
service. (Alkassar says that Easy Taxi will partner with taxi
services “if they are interested,” but notes that in Saudi Arabia,
the company is mostly partnering directly with drivers.)
Although bespoke limo services and taxis are slightly different
markets, in Saudi Arabia, the biggest differences between the two
services will likely come down to their customer service, cars, and
pricing. Careem has worked to supply Lexuses and high-end Audis;
Easy Taxi will offer standard taxis. Easy Taxi, like Uber, offers
on-demand rides, and, unlike Careem, doesn’t require a destination
ahead of time. It doesn’t calculate the fare or offer credit card
payment, instead allowing riders to negotiate the trip fare on
their own or use the meter. Users will not be able to book a trip
to or from the airport ahead of time, a niche Careem currently owns
(and one that's popular in this region). Easy Taxi will, however,
offer pre-booking for corporate deals with clubs or
restaurants.
With $7 million in its pockets, Easy Taxi will have more capital to
play with than Careem, which just secured $1.7 million
from STC Ventures. While Careem will benefit from STC’s local
infrastructure and placement in its app store, Easy Taxi take
advantage of the global experience and design and development teams
that Rocket provides, Alkassar says.
Alkassar insists that Easy Taxi “has a heavily experienced and
developed product,” but stops short of saying it’s superior to
those of rivals. Yet the company still has some bugs to work out.
From my perch in Beirut, the app could not locate The Marriott in
Riyadh. When I requested a taxi in Riyadh, it insisted that I
select from several options for payment in Dinheiro, Brazil’s
currency, and then insisted that I add a number in the address
field before I could book a taxi. This is the beta testing phase,
after all.
Whether either service succeeds, regardless of rivalry, will come
down to its execution, driver quality being the toughest variable
to control. Whether riders prefer the luxury cars and
pre-determined fares that Careem offers, or paying in cash for a
regular taxi on Easy Taxi, good, courteous drivers could be the
commodity in short supply. Keeping those drivers happy and loyal
could be tricky in a market in which exclusivity has little
meaning.
iMENA’s Tabaza agrees that success will come down to execution,
specifically, “who can market better, sign up more cars and taxis,
and get more passengers.” Yet, he says, “this is a massive market.
There's enough market share for all companies to grow
significantly."