Dubai-based ride-hailing company Careem is in talks with potential partners in Europe and the United States to allow its customers to use its app outside its home markets in the Middle East and North Africa, in a bid to compete with global rival Uber, its chief executive officer told Zawya.
“When it comes to other parts of the world, Europe and America and other places, we actually want to make sure that our users who are travelling to these markets have a seamless experience,” Careem’s co-founder and CEO Mudassir Sheikha said during an interview in September at the company’s headquarters in Dubai.
“So there have been discussions with some companies that operate in those markets to see if we can have a roaming alliance which allows your Careem app that has your credit card, that has your home address that has your preferences, to automatically get you a car.
“Those discussions have been going on for a long time. Or at least the first discussion happened two years ago. It’s going to happen at some point for sure because that just makes complete sense,” he added.
Some of the most likely international names Careem may be eying include United Kingdom-based Hailo, which last year merged with German rival MyTaxi to create Europe’s largest taxi-hailing app. The merged entity has 70 million passengers and 100,000 registered drivers in over 50 cities across nine European countries, the company said.
MyTaxi is owned by German carmaker Daimler and this summer Reuters reported that the Stuttgart-based brand was one of a number of international investors who took part in Careem’s latest $150 million funding round
Uber’s biggest rival in the United States is Lyft, which was founded in 2012, three years after Uber. Lyft and Careem are linked by the fact that Saudi Arabia’s Kingdom Holding, the investment firm led by billionaire Prince Alwaleed bin Talal - who was one of the princes detained as part of Saudi Arabia’s clampdown on corruption - was part of a group which bought a 5.3 percent stake in Lyft in 2015
. Kingdom Holding was also one of the investors which took part in Careem’s latest funding round this summer and also holds a seat on the company’s board, according to a report by Reuters in June
Elsewhere, other possible partners include Malaysia’s Grab, which has a large presence in Southeast Asia, Yandex.Taxi in Russia, Ola in India and Didi Chuxing in China. Reuters reported in August that Didi Chuxing, China’s largest ride-hailing firm, had invested in Careem
and the two companies would “cooperate on smart transportation technology, product development and operations”. Didi already has a partnership in place with Lyft and deals with similar operators in Latin America, with more on the horizon in Southeast Asia, Europe and Africa, according to the Reuters report.
Last week, a Careem spokesperson confirmed that talks with potential overseas partners were still ongoing, but declined to give any further details. “Whilst we cannot provide the names of partners at this stage, what we can say is that they are leaders in their respective markets and once the partnerships are rolled out, they will allow seamless use of local apps globally,” the spokesperson said in an emailed statement.Fast-paced growth
Set up in 2012 when Sheikha and his management consultant colleague Magnus Olsson noticed there was a need for a fast, reliable transport service in most cities in the region, Careem is now present in over 80 cities in 11 countries across the Middle East and North Africa (MENA).
With over half a million captains – or drivers – and 12 million users registered with the app, Careem is seeing growth rates of around 30 percent month-on-month, according to the company.
“Our belief is that we're ahead now [of Uber],” Sheikha said of Careem’s market share in its home market. “Overall, we believe that we are the market leader. We are growing rapidly and I think if we believe if we keep on growing at the same pace then we will remain the market leader,” he added.
In addition to talking to international partners, Careem is also looking to expand within the region, with the focus on Africa, Sheikha said. The company already operates in Egypt and Morocco and the Sahel area of West Africa. “We do not have any updates on Africa yet. It is something we are working towards as it has significant potential and we believe there is a huge opportunity,” a Careem spokesperson said.
Careem’s funding round in June saw the amount invested in the company rise to $500 million, up from $350 million last December when it was valued at $1 billion, according to Reuters. In addition to Daimler and Kingdom Holding, other recent notable investors have included Saudi Arabia’s state telecoms company and Japanese internet firm Raukten.
As it develops its footprint in the region, an initial public offering is the next-most obvious step for Careem and earlier this year Sheikha was quoted in the Middle Eastern press as saying this could happen within the next two-to-three years.
“We had a business plan that took us to breakeven. We had the funding required to get to that business plan. Now on the IPO topic, you know we are a rapidly growing company at some point people that have invested in the business earlier on will want to find some avenue for exit, so it is a natural milestone for a company like Careem and it's going to happen at the right time,” Sheikha told Zawya.
However, he admitted that an IPO was not something he was heavily focused on at the moment. “This is not a topic that we're spending much time thinking about… but I know that we are growing rapidly and I think if we keep growing at the same pace then within the timeline that we discussed we may have an opportunity to [do] something.”
Last year, Careem opened a research and development centre in the German capital of Berlin. Sheikha said this was because there is a lack of qualified technology staff in the Middle East and recruitment was one of Careem’s biggest challenges at the moment.
“The region has not traditionally had amazing technology universities… So it's a challenge for us to recruit people locally,” he said.
“We've had to basically go scour the globe for the right players. So I think that's really a challenge and I think if there is one big challenge that is standing between us and Careem as the tech giant of the region [this is it]… We spent a lot of time in the U.S., in Europe to recruit, trying to find anyone that has some links to the region… So that's a huge priority for us ,” he added
(Reporting by Shane McGinley; Editing by Michael Fahy)
© ZAWYA 2017