Meet Full Truck Alliance — China’s ‘Uber For Trucks’
This Chinese startup seems to be raising billions in funding. So, what is it about?
The pandemic has been a tough time for a lot of companies, especially startups. The toughest time has been faced by those companies, which bet on such startups and yes, we are talking about SoftBank. SoftBank was having a bad time even before the pandemic. Their humongous bets on Uber, Oyo and WeWork didn’t turn out to be very successful. Right now, Uber is struggling to cut losses and Oyo has laid off thousands of people.
However, amidst all of this storm, there is a bet that SoftBank made which might bear some fruits for its Vision Fund. That company is Full Truck Alliance or Manbang and its business in China recently turned a profit. The company, on Tuesday, said that it has broken even this year. So, what is this company doing and how is it making money?
So, What Is Full Truck Alliance (FTA)?
FTA was formed by a merger between truck service platforms Yunmanman and Huochebang in 2017. The idea behind these platforms was to connect drivers with truck owners and their mutual client base. This company is often described as China’s “Uber for trucks”.
How Does FTA make money?
According to the firm, it has issued 1.55 million toll cards as of August, processes 130 million yuan of top-ups daily and handles 1 billion yuan of gas purchases via its system monthly. The company’s financing arm has helped 580,000 drivers access 6.5 billion yuan of loans. What is the big deal about this you ask? The company charges a fee for these services.
The firm charges a fee of truckers’ shipping fees and selling top-up cards and directing them to service stations as well as truckers use its online payments system to buy petrol. The company also generates revenue from membership fees paid by customers like factories that utilised its platform for long-haul service.
The Big Fundraising
Recently, Full Truck Alliance raised $1.7 billion from investors including SoftBank Group Corp and Tencent Holdings Ltd before an initial public offering. The funding round was led by SoftBank’s Vision Fund, Sequoia, Fidelity International and Permira. Other investors included Jack Ma’s Yunfeng Capital, Hillhouse, GGV, Lightspeed, All-Stars Investment and Baillie Gifford. Sources told Bloomberg that the funding round valued the company at around $12 billion.
For The Close
What we need to understand here is that the potential that is out there for FTA — According to a report by G7, an IoT and big data firm and consulting company Bain & Co, China’s road freight market size touched 5 trillion yuan in 2017, which makes it the biggest road transportation market in the world. Also, another report by IBISWorld says that the freight trucking industry is anticipated to grow at an annualized 3.2% over the five years through 2020, to total $111.1 billion.
Also, FTA is branching out. It is expanding into automotive technology. The firm is backing Plus.ai, an autonomous trucking startup based in the U.S and China. And this is the perfect time for entering the autonomous vehicle industry because the pandemic has accelerated the development of autonomous vehicles and smart cities in China. Also, for countries around the world, progress in China can be used to drive better outcomes for themselves.
McKinsey estimates that China has the potential to become the world’s biggest market for autonomous vehicles. In its forecast, it said that autonomous vehicles can account as high as 66% of the passenger-kilometres travelled in 2040. This will create a market revenue of $1.1 trillion from mobility services and $0.9 trillion from sales of autonomous vehicles by 2040.
All we want to say is that we should all keep an eye on FTA and its investments in autonomous vehicle startups. Because there is a huge potential for this industry, for China as well as for FTA.
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