It's one of the hottest tech names in Southeast Asia.
Grab, previously known as GrabTaxi, has emerged as a genuine, homegrown rival to US behemoth Uber in the six Southeast Asian countries it operates in. A $750 million funding round in September, led by Japan's Softbank, valued it at $3 billion.
But long before it became a hot name, Grab founder Anthony Tan took the decision to move the company from his native Malaysia south to Singapore.
The move came after it secured $10 million of series A funding from Vertex Venture Holdings, Singapore's biggest venture capital firm and a unit of Temasek, the Singapore government investment fund.
Chua Kee Lock, group president and CEO of Vertex, told FinanceAsia in an interview that Vertex persuaded Grab to make the move — and explained why he expects more hot start-ups from the region to make the same move.
“We found the founder very interesting and wanted to invest in the company,” Chua said of Grab's Tan. “And we encouraged them to relocate to Singapore,” he said.
Tan seems to share the positive view of Singapore. “It is the undisputed hub of Southeast Asia, a region we are focused on and need to be closer to, in order to solve problems with efficiency and safety in different markets,” Tan said at a media briefing in 2015 when announcing setting up a research and development centre in Singapore.
The advantages Singapore touts include government subsidies and tax breaks, for example. But more importantly for start-ups and early-stage investors like Vertex, according to Chua, is the well-developed ecosystem for start-up funding that helps attract international financiers and bring higher valuations for public offerings.
“International financiers are more familiar and comfortable with the legal system and process in Singapore,” said Chua. And investors don’t need to worry about paying large legal fees, then finding out a company is in an industry in which foreign investment is forbidden, or that there is a new regulation comes in the way, he added.
This, he says, has helped Grab attract investors including GGV Capital, Tiger Capital, Hillhouse Capital, SoftBank, Coatue, CICC and Didi Chuxing (then named Didi Kuaidi). Its $750 million Series-F round made Grab the second most valuable tech company in the region after Singapore-launched consumer internet platform Garena, which rebranded to Sea in May and is now in the process of an IPO in the US.
Founded in 1988, Vertex now has a war chest of $1 billion across five funds. It specialises in investing in information technology, clean tech, and healthcare.
By October 2015, it had publicly listed four start-ups it invested in, including mobile gaming developer IGG, which was listed in Hong Kong in 2013. It also exited another six deals, including the Chinese app distribution platform 91 Wireless, which Baidu bought from China’s NetDragon Websoft for $1.9 billion in 2013.
