China's Didi Kuaidi agrees partnership with US-based Lyft

Didi Kuadi's investment is part of a funding round led by Japan's Rakuten earlier this year that also featured Carl Icahn and Chinese strategic players Alibaba Group and Tencent Holdings. Other investors in Lyft include Andreessen Horowitz and Coatue Management.

Alibaba, Tencent and Coatue are also backers of Didi Kuaidi. They recently participated in a $3 billion funding round for the company - said to the largest-ever fundraise by a private internet start-up globally - that also featured China Investment Corporation (CIC), Ping An Ventures and Capital International.

The capital will be used to battle for market share - chiefly by offering subsidized rides, which lead to substantial operating losses - against Lyft's US-based competitive Uber. It has attracted $1.2 billion from investors, including local search giant Baidu, for a dedicated China unit.

The Didi Kuaidi-Lyft alliance takes the rivalry with Uber to a new level. They will share knowledge and resources to further product and technological development and to explore cross-platform and cross-regional opportunities. Significantly, Chinese travelers in the US will be able to use the Didi Kuaidi app to source rides through the Lyft platform, with US visitors to China enjoying reciprocal privileges.

The number of visits between the two countries exceeded 7.8 million in 2014 and is growing at double-digit pace.

"Didi Kuaidi is excited to form this groundbreaking collaboration with Lyft, the first company to develop a peer-to-peer service," Cheng Wei, CEO of Didi Kuaidi, said in a statement. "From our home base in China, Didi Kuaidi is building China's largest one-stop on-demand transportation service platform. As the industry innovation leader, Lyft will continue to build upon its existing market and brand power."

Lyft was founded in 2012 by Logan Green and John Zimmer and provides services in 65 US cities. The Chinese company was also set up in 2012 and existed as two competing entities - Didi Dache and Kuaidi Dache - until they merged earlier this year.

Didi Kuaidi's core business is an app that connects passengers and taxi drivers. The company has since expanded into private car hire, carpooling and bus-sharing, and is active in 360 cities nationwide. It claims to have an 80% share of the private car service market and a 90% share of the taxi-hailing service market, processing three million orders in each category every day.

Lyft is not Didi Kuadi's only investment in an industry peer. In August, it joined in a $350 million round for Southeast Asia-focused taxi-booking app GrabTaxi alongside CIC. Existing backer Coatue was also among the participants.

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• Topics
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