Deal focus: Warburg Pincus rides with China’s eDaijia

Legislation targeting drunk driving has been around for 20 years. It has given birth to a cottage industry of designated drivers who, for a fee, ferry the intoxicated individual home in their own vehicle. According to Julian Cheng, managing director at Warburg Pincus, there are 800,000 orders a day and the industry generates $8 billion in annual revenue.

Korea's four largest cities - Seoul, Busan, Incheon and Daegu - have a combined population of around 18 million and it is these metropolises that drive demand. Shanghai, Beijing, Tianjin and Guangzhou between them have urban population of more than 63 million. Based on a similar penetration rate to Korea, those cities alone should be able to generate daily orders of 2.8 million.

Comparisons are difficult because China is less developed than Korea and its drunk-driving laws are younger. However, expectations of growth in demand - and the nature of supply - are behind Warburg Pincus' decision to lead a $100 million round of funding for Chinese service eDaijia.

"The huge difference is the $8 billion in revenue in Korea is supplied by 8,000 mom and pop vendors - people who hand out name cards and rely on third-party platforms to connect them to customers," Cheng says. "In China there is one company with a 90% market share. Drivers and customers are directly on the app."

Founded in 2011, eDaijia has previously received funding from Matrix Partners and Lightspeed China Partners, both of which participated in the latest round, as well as classifieds marketplace 58.com. The firm has a presence in 25 tier-one and tier-two cities and 150 tier-three cities. This year it plans to enter another 150 tier-three cities. It has 80,000 registered drivers and receives 120,000 daily orders.

Cheng notes that designated driver services can extend to any service that involves hiring a driver for your car, including elderly people who need to travel for hospital appointments or businessmen who require a driver for a day while in a nearby city. EDaijia also wants to offer day-time, car-washing and chauffer services, and expand overseas (it is already present in Korea).

The company is likely to face competition from the dominant players in China's taxi-booking app space, Kuaidi Dache and Didi Dache, which plan to provide designated driver services. Cheng, however, plays down the threat.

"There is a big difference between ordering a car and ordering someone to drive your car," he says. "When you get a taxi, it's a short, standardized experience. If you are ordering a driver, this is someone driving you home in your car while you are in a drunken state. It is a completely different level of trust."

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Technology
• Expansion
• Greater China
• Venture
• Growth capital
• Venture
• Warburg Pincus Asia
• TMT
• Transportation
• China