Venture Capital

INTERVIEW: KYMCO Capital aims for synergy in GBG alliance

Read more at www.taipeitimes.com

KYMCO Capital managing partner Gary Ting talked about the venture capital fund’s investment in GBG Express, a delivery subsidiary of Taiwan Taxi, and his views on electric scooter fleet management with ‘Taipei Times’ staff reporter Lisa Wang on July 7

Taipei Times: What is the story behind KYMCO Capital’s (金庫資本) decision to invest in GBG Express (全球快遞), a goods delivery company that has been keeping a low profile?

Gary Ting (丁學文): The fund is keen to invest in e-mobility and we are seeking to broaden our portfolios. About two years ago, the fund invested in Southeast Asian ride-hailing start-up Grab because the company better understands how the e-mobility ecosystem is shaping in the markets, and how to communicate with venture capital. Grab is set to launch an initial public offering in the US via a special-purpose acquisition company merger later this year, faster than when we originally expected, 2023. Through cooperation with Grab, we have accumulated a lot of know-how about how to manage a fleet, how to utilize and analyze the data we collect and how to properly tell and sell stories about a start-up to customers and investors.

Investing in GBG Express came unexpectedly. We had been hunting new e-mobility investment targets overseas. We had barely heard about GBG Express until Grab mentioned the company. Grab said it had visited Taiwan Taxi (台灣大車隊) when the company started about eight years ago as the Grab team tried to learn from Taiwan Taxi about how to manage a fleet using technology. GBG Express is a delivery subsidiary of Taiwan Taxi.

Photo: Amy Yang, Taipei Times

Compared with most start-ups, Taiwan Taxi and GBG Express operate their business in a relatively traditional way. They developed many good services and products, but they are not good at selling their stories to investors. KYMCO Capital knows how to sell and knows what interests investors. That is where we can help.

TT: What plans do the KYMCO Capital fund have to help GBG Express grow?

Ting: KYMCO Capital’s role is to provide a platform for companies, start-ups, future unicorns — invested in by the fund or by investors of the fund — to leverage one another’s strengths. In GBG Express’ case, KYMCO (光陽), a scooter and motorcycle manufacturing giant and one of the fund’s investors, can provide its Ionex electric scooters to help GBG Express electrify its fleet. At the same time, KYMCO will see increases in sales as it adds one more new sales channel through start-up GBG Express, which has 26,000 riders. [GBG Express plans to have 50 percent of its riders on electric scooters by 2023.] KYMCO mostly sells its scooters and motorcycles through distributors as most traditional scooter makers do.

Also, KYMCO’s battery swapping stations will be available for GBG Express riders to find fully charged batteries between runs. GBG Express can also opt to install micro battery-swapping stations in the rest stops it shares with Taiwan Mobile taxi drivers.

The fund has invested in several software start-ups as well, which can help create new software, enabled by artificial intelligence, for GBG Express riders to plot routes between multiple delivery locations for customers such as PChome Online Inc (網路家庭), Momo.com Inc (富邦媒體) or ShopeePay Taiwan Co (蝦皮支付). GBG Express has accumulated large amounts of data. This will work similarly to what Grab currently operates. GBG Express has the potential to become Taiwan’s Grab.

TT: Are there any overseas expansion plans for GBG Express?

Ting: We see potential business opportunities in Southeast Asian markets, as Taiwanese companies are relocating production lines to the region amid trade disputes

between the US and China. Besides, Thailand and Indonesia are among the top travel destinations for Taiwanese. We might leverage Grab’s market position in the region by integrating Taiwan Taxi’s 55688 app with that of Grab to provide ride-hailing and delivery services. The first step will be introducing electric vehicles, made by KYMCO and adopted by GrabWheel riders, to GBG Express at home. This will happen probably this fall, after the scheduled transaction is completed at the end of this month. With a NT$180 million [US$6.43 million] investment, the fund will own a 26.47 percent stake in GBG Express, which is valued at NT$500 million. That will give KYMCO Capital a seat on the delivery company’s board.

TT: What is GBG Express’ competitive edge?

Ting: GBG Express focuses on business-to-business (B2B) service, providing last-mile goods and grocery delivery service, which is different from the business-to-consumer (B2C) model offered by Uber Eats and Foodpanda. GBG Express helps collect and digitize customers’ data for its clients for further big-data analysis, while its B2C service providers tend to own the data and do not make it available to retailers.

In a way, GBG Express is a contracted fleet for its clients, as most retailers, especially small-scale stores, do not have sufficient resources to operate their own delivery fleet. With us, there is no need for extra logistics management, other than inventory handling. The COVID-19 pandemic has accelerated corporate digitization, as most consumers shop online to avoid direct contact. That leads to faster digitization for retailers.

Another advantage for operating a B2B model is that it is easier to turn a profit than with electric scooter fleets concentrating on B2C business. Electric two-wheelers are still much more expensive than gasoline-powered scooters. Without government subsidies, it is unaffordable for the mass market.

GBG Express has been earning decent profits, as enterprise customers and government agencies have deeper pockets and are more willing to spend on new services.

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