InDrive, the “deal-based” ride-hail platform popular in Latin America and Asia, has launched a new venture and M&A division called New Ventures to invest up to $100 million in startups in emerging markets in next years.
The new venture arm comes four months after InDrive launched in its first US market in south Florida. As InDrive works towards profitability, the company sees this as an opportunity to diversify revenue streams.
“We see great opportunities in different industries in our ecosystem,” Andries Smit, vice president of New Ventures, told TechCrunch. Smit noted that the timing was right because in the current economic climate, valuations have returned to normal, which could make investing in startups more profitable for InDrive.
InDrive, which started in Russia and is now based in the US, will target startups from regions where it already has a presence, including Latin America, the Middle East and Africa, Southeast Asia and Central Asia.
“We need to add value to these businesses as much as they add value to us, and therefore the biggest leverage is in markets where we already have some significance,” said Smit, noting that InDrive is also well-positioned to help “local gems” are breaking into new markets.
“And in those cases, we’re very interested in investing and potentially acquiring,” Smit said.
InDrive will invest vertically and horizontally from the riding industry, with the aim of either acquiring or using the services of these companies.
The first bullseye for potential investment would be neighborhood startups, such as delivery, where drivers can leverage an additional service. In May, InDrive acquired Master Delivery to add to its product offering.
The second bullseye, says Smit, is horizontals like fintech or insurtech, technology that could solve a specific problem that InDrive’s audience of drivers and passengers might be facing.
The $100 million won’t come from a fund, exactly. Smit said the plan is to invest the money “over the next several years by making annual distributions of investment capital from our balance sheet, starting in 2024. We will measure the annual distributions based on the size of our pipeline of investment opportunities that meet strict growth and scalability criteria and are consistent with our corporate mission.”
Smit did not specify where exactly the money on InDrive’s balance sheet will come from, saying it will be a combination of cash flow from operations and capital raised in the past. In February, InDrive raised $150 million from General Catalyst in a debt financing round. TechCrunch asked if the company is still unprofitable and if it plans to raise more capital soon.
The New Ventures unit will largely provide capital to post-seed/Series A stage companies that can demonstrate significant year-on-year growth in excess of 2-3x. The venture arm also highlights the importance of healthy economics and cash flow at its portfolio companies, demonstrating efficiency across loan-to-value, customer acquisition and retention metrics.
InDrive says the New Ventures unit will help its portfolio and acquired companies scale rapidly on the mainstream transportation platform by gaining access to the company’s expertise, technology and over 200 million active customers in more than 45 markets and 700 cities.
Smit took over the new unit in October after holding strategic positions in startup and corporate environments. His career includes leading roles in business transformations, acquisitions and integrations at major companies such as Morgan Stanley and Aviva. In addition, Smit has contributed to building ventures as a partner at Stryber, a prominent strategic development partner and independent business enterprise builder active in Europe, the Middle East and the Asia-Pacific region.
Charm aside, inDrive, which raised a $150 million Series C round in 2021 from Insight Partners and General Catalyst at a $1.25 billion valuation, is working to build out its product offering. The company has expanded beyond ride-hail and into long-distance transportation, freight delivery, job support, courier delivery and job search.
This article has been updated with more information from InDrive and Andries Smit.
