The on-demand ride industry is assembling an awkward group of passengers.
The five global giants of ride-hailing have a tangled web of overlapping investors. At least 11 companies or funds have invested in two or more of the biggest startups: Uber and Lyft in the United States, China's Didi Chuxing, Grab in Southeast Asia and India's Ola. The overlapping investors in part resulted from two mergers in China. Last year's combination of two rival startups to create Didi, and the just-announced deal to sell Uber's China operations to Didi, are uniting the three companies' investor bases.
Not all five of the on-demand companies compete with one another, but some very much do. It has made for strange bedfellows.
As a result of the pending Didi deal, Uber will soon own about 20 percent of Didi, which earlier invested in Lyft. That will mean Uber indirectly owns a piece of Lyft, its fiercest rival in the U.S. Japan's tech-and-telecom giant Softbank spent heavily to back Ola, Grab and China's Kuaidi Dache (which merged with Didi in 2015) as local alternatives to Uber. The Didi-Uber merger helps Softbank's Didi investment but also gives Uber the money and motivation to crush Softbank's other two ride-hailing investments. China's tech superpowers -- Baidu, Alibaba and Tencent -- don't like one another, and each backed a different Chinese ride-hailing startup. They'll soon be aligned as investors in Didi.
Startups typically don't like sharing investors with their competitors because it can get weird. No doubt there will be some walls erected to shield Lyft's secret plans and financial results with Uber, for example. Mostly, the on-demand startups and their investors will simply have to learn to navigate through the awkwardness.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Lyft said it would "evaluate" its partnership with Didi after the combination with Uber's China operations.
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