SoftBank snubs Uber (again) with $100m investment into Brazilian rival

IT’S just an inkling at this point, but it would seem SoftBank is one VC with some kind of Uber takedown plan.

The Japanese venture group has just poured US$100 million into a Brazilian ride-hailing startup called 99, and according to Bloomberg, this is not the first time SoftBank has backed an Uber rival.

Earlier this year, SoftBank was a part of a group of investors trying to get Didi Chuxing to take its US$5 billion, and it seems to be continuing its quest to take Uber down a notch with its latest investment.

A Latin American competitor to Uber — 99 — has raised $100 million from SoftBank of Japan to fuel growth https://t.co/VDBT8pCL6T

— New York Times World (@nytimesworld) May 24, 2017

Bloomberg notes Latin America is actually “one of the regions for Uber where margins are the highest”, so it is an important market for the San Francisco-headquartered company. By arming its competitors with a fair amount of capital, SoftBank will be driving down Uber’s margins and forcing it to spend more on subsidies.

The rival, 99, is no small potato as it has raised another US$100 million half a year ago from Didi and Riverwood Capital. Launched in 2012, it operates in more than 400 cities in Brazil and has a team of 350 people.

Also worth noting is that SoftBank is also an investor in Uber’s US rival Lyft, as it joined in on a follow-on round of US$500 million – helping the startup bring its valuation to US$6.9 billion.

This is all really bad news for Uber, as it is slowly losing ground to its rivals after a seemingly endless string of PR scandals. Meanwhile, Didi, the very company that pushed it out of China, has been signing a number of cooperation agreements around the world, and its collaborative approach has attracted the attention of VCs such as SoftBank.

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Lyft, previously seen as a small-time rival, is now starting to become a threat. Besides counting SoftBank as an investor, Lyft has taken an alternate approach to doing business, often trying to do social good. While Uber got slammed for appearing to try to profit from the taxi strike at JFK Airport, Lyft emerged in a more positive light by promising to donate US$1 million to the American Civil Liberties Union over the next four years.

While it’s not uncommon for companies to band together against a larger rival, in a classic David and Goliath battle, it’s a whole new different ball game with VCs start to get involved.

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