Enthusiasm for tech funds has China's top ride-hailing app pegged for a $50 billion valuation, on the back of a new round of fund-raising. Ryan Brooks reports.
A eye-popping valuation for China's answer to Uber. Sources say Ride-hailing app Didi Chuxing is close to a deal to that would value it at around $50 billion, making it the most valuable startup in China. The company is looking to tap investors for up to $6 billion in additional funding. But as Reuters' Breakingviews Robyn Mak explains, it's unclear why they even need the cash. (SOUNDBITE) (English) REUTERS BREAKINGVIEWS COLUMNIST, ROBYN MAK, SAYING: "Last June, they raised over 7 billion dollars from Apple and other investors. And at that time they already said that they had over 10 billion dollars of funds to use, um and shortly after that they acquired their largest competitor in China, Uber. So they have a near-monopoly in their home market. Uh, overseas expansion may be a factor. So they do have stakes and investment in their partners in other countries, but um, but unless they're planning on buying one of their partners outright, it seems a bit unnecessary to raise an extra 5, 6 billion dollars." Even though overall, venture capital deal like this are slowing down right now, Lately a handful of tech funds have raised huge sums of money. Those sky-high numbers may partly be what's driving up Didi's value, too. (SOUNDBITE) (English) REUTERS BREAKINGVIEWS COLUMNIST, ROBYN MAK, SAYING: "Didi's 50 billion dollar valuation is the latest sign of tech exuberance, uh, inflating startup values, and what I mean by that is some, a lot of tech-focused investors have been raising incredible sums of money, um so just earlier this month, Silverlake, closed a 15 billion dollar tech fund which is one of the largest in the U.S. on record, and of course you have Softbank, um which is finalizing a 100 billion dollar fund. So you have a lot of capital chasing a limited number of deals." If this 6 billion dollar drive goes through, Didi's valuation will have jumped up from 35 to 50 billion in less than a year. A bigger sack of cash is always nice to have, but investors will be watching to see how the company uses it to fuel its next conquest.