The Top 25: #16 Stephen Zhu, Didi Chuxing
Stephen Zhu, vice-president of strategy at Didi Chuxing, has had an impressive few years since joining the China-based ride-hailing service in 2014 from Goldman Sachs, where he arranged private equity deals.
Didi Chuxing was formed from the merger in 2015 of two Chinese ride-hailing platforms – Tencent-backed Didi Dache, and Kuadi Dache, which had received early-stage funding from Alibaba. Didi Chuxing is now the world’s largest online transportation platform with more than 450 million users and 21 million drivers and has a traffic management system to reduce congestion through machine learning.
Didi’s meteoric rise has been fuelled by nearly $20bn of funding since it was founded, including $9.5bn across two rounds in 2017, led by Japan’s SoftBank.
Alongside SoftBank, Didi’s backers include Chinese tech giants Alibaba, Baidu and Tencent, as well as corporations Apple and Foxconn and Abu Dhabi state investor Mubadala.
Perhaps the most significant piece of business was the acquisition in August 2016 of Uber’s China operations. The deal meant Didi would control the Uber brand in China, while becoming a minority stakeholder in the US firm. In return, Uber and its Chinese investors – among them, web services company Baidu – received an “economic interest” in Didi worth 20% of the business.
Didi itself won Global Corporate Venturing’s Large Deal of the Year award in 2017 for its own fundraising. In a company profile published then, Jeffrey Li, managing partner of Tencent Investment, said Tencent had had a strong association with Didi since his company put money into Didi Dache in 2012 and helped it develop through the WeChat application.
Li said the merger of Didi Dache and Kuadi Dache, and the more recent acquisition of Uber, had put Didi Chuxing in an excellent position in both domestic and international markets. “We helped them a lot with those two merger transactions and that has released Didi from competition in China and given it freedom to move into other verticals,” Li said.
Zhu used corporate venturing to develop Didi’s international strategy. In a Tech in Asia interview in November 2015, he said: “In each region, you have different users, different drivers, a different regulatory regime. So we go with a local champion that knows the market much better.”
Didi invested in Uber’s main US peer, Lyft, through a series of corporate venturing rounds from 2015, and also, often alongside Tencent or SoftBank, has investments in Taxify, which operates in Europe and Africa, Careem in the Middle East, Ola in India, Grab in Southeast Asia and Brazil’s 99.
Through its operations in China and its investment portfolio, Didi reaches 60% of the global population in 1,000 cities across the world, according to news outlet the National.