InDrive, the ride-hailing service that has gained popularity in Latin America and Asia, recently introduced its new division, New Ventures. This branch is set to invest as much as $100 million in emerging market startups over the coming years. This strategic move comes just four months following InDrive’s expansion into its first U.S. location in South Florida. Aiming for profitability, InDrive views this expansion as a means to broaden its revenue sources. Andries Smit, the Vice President of New Ventures, shared with TechCrunch that the current economic climate presents an ideal time for such investments, as startup valuations have stabilized, potentially making these ventures more beneficial for InDrive.
InDrive, originally from Russia and now U.S.-based, plans to focus its investment efforts on startups in areas where it already has a strong foothold. These regions include Latin America, the Middle East, Africa, Southeast Asia, and Central Asia.
Smit, a representative of InDrive, emphasized the mutual benefits of such investments, stating that the company seeks to bring as much value to these businesses as they bring to InDrive. He highlighted the company’s strategic position to assist local startups in expanding into new markets.
Furthermore, Smit mentioned that InDrive is keen on investing in and potentially acquiring companies that align with their interests. The company’s investment strategy will span both vertically and horizontally within the ride-hailing industry, focusing on either buying out or utilizing the services of these startups.
InDrive is setting its sights on two key investment areas, or “bullseyes,” for channeling its resources. The first area focuses on startups that complement the ride-hailing sector, such as delivery services. This strategy was exemplified in May when InDrive expanded its offerings by acquiring Master Delivery.
The second area of interest for InDrive, as outlined by Smit, involves broad sectors like fintech and insurtech. These technologies aim to address specific challenges encountered by InDrive’s user base, including both drivers and passengers.
Regarding the investment strategy, InDrive is not relying on a traditional fund. Instead, as Smit explains, the company plans to allocate $100 million over the coming years. This will be done through annual investments drawn directly from InDrive’s balance sheet starting in 2024. The amount given each year will depend on the volume and fit of potential investment opportunities that align with InDrive’s rigorous criteria for growth, scalability, and corporate mission.
Smit did not specify the sources on InDrive’s financial statements from where the funding will originate. He indicated it would be sourced through operational cash flow and previously acquired capital. InDrive secured $150 million in a debt financing round by General Catalyst in February. TechCrunch has inquired about InDrive’s current profitability status and whether it plans to seek additional funding shortly
The New Ventures division will primarily invest in companies at the post-seed or Series A stage, which show significant annual growth, typically more than double or triple. This venture branch also emphasizes the importance of solid economics and cash flow in its investments, focusing on the efficiency of metrics like loan-to-value ratios, customer acquisition costs, and customer retention.
InDrive’s New Ventures division is set to enhance the growth of its portfolio and acquired businesses by leveraging the company’s expertise in market entry, technology, and a vast customer base of over 200 million active users. This expansion covers more than 45 markets and 700 cities worldwide.
Smit, who assumed leadership of this new unit in October, brings a wealth of experience from his tenure in strategic roles within startups and large corporations. His impressive career includes key positions in business transformation, mergers, and integrations at leading firms like Morgan Stanley and Aviva. He has also played a significant role in venture development as a partner at Stryber, a major strategic growth ally and independent corporate venture builder in Europe, the Middle East, and the Asia-Pacific region.
Beyond its core ride-hailing services, inDrive, valued at $1.25 billion following a $150 million Series C funding in 2021 from Insight Partners and General Catalyst, is diversifying its offerings. The company is expanding its scope to encompass intercity travel, freight logistics, task assistance, courier services, and job search functionalities.