Chinese ride service Didi Chuxing raised $5.5 billion in May, adding to more than $10 billion it raised last year. Assuming it is no longer burning through $1 billion a year as it did during its fight for Chinese market share with Uber, Didi now has a staggering cash balance for a startup, perhaps as much as $13 billion.
This is very strange. Since when do startups raise and then just sit on this much cash? Especially since Didi is now a near-monopoly in China, having conquered its two largest rivals. Following Didi’s take over of the local operations of Uber and Kuaidi Dache, Beijing’s CNIT-Research recently put its market share at 94%.
So what is the rationale for raising all this money? In the press, the commonly cited motivations for Didi’s latest fund raising are […]