Kakao Mobility, the ride-hailing subsidiary of South Korean messaging and internet giant Kakao, has made its first acquisition as it looks to raise its international profile. It has acquired Splyt, a startup out of London that works with apps in areas like travel, ride-hailing and finance to help them build out “super app” strategies by integrating other services.
Kakao Mobility has already worked with Splyt, and it wants to use the asset to spur global expansion plans across Southeast Asia and Europe. Kakao Mobility currently offers limited services in about 30 markets outside of South Korea: most recently, it launched in Guam last year and Laos earlier this year.
“Splyt and Kakao Mobility’s technology teams have been collaborating since 2019 to integrate and enable global ride-hailing services for Kakao T users through Splyt’s ride-hailing API platform,” CTO of Splyt Stephen Mason told TechCrunch.
Financial terms of the deal are not being disclosed, but there are some signs that it may not have been a super outcome for this super app enabler.
Splyt says its services are used by more than 2 billion people in 150 countries by way of customers like Alipay, Uber, Binance, Grab, Trip.com, Booking.com, Kakao itself and 70 others. But after a flurry of activity over the last several years — including raising $33.5 million from SoftBank, Grab, AmEx and others, per PitchBook data — Splyt stopped providing updates about its business in July 2022.
The acquisition will include technology and talent. Splyt has around 30 staff, and they will join Kakao Mobility. Key management at Splyt will move to South Korea to continue to manage and integrate the team into Kakao Mobility, a spokesperson for the latter company said. (Kakao Mobility has about 950 employees.)
It’s not yet clear how Kakao Mobility intends to use Splyt’s tech: using it as a lever to work with a wider network of international partners or using it to extend Kakao Mobility’s own app, Kakao T, which currently has around 32 million registered users.
Kakao Mobility itself is at a crossroads as a business: The company was originally partly spun out of Kakao Corporation in 2017, and it is still 58% owned by it. But last year Kakao had to shelve plans to sell part of that stake to a PE firm after pushback from drivers and employees. A further plan for an IPO has also been put on hold amid a cool market for tech stocks at the moment.
Other investors in the mobility business have included Carlyle, TPG, LG and Google, which have poured more than $840 million into it. A report last year in Korea Economic Daily notes that Kakao Mobility — which, in addition to ride-hailing also offers parking space searches, navigation, bike rental and has worked on autonomous driving — was valued at $6.5 billion.
Splyt’s emergence as a business speaks to a very particular time in the on-demand services market. Apps like Grab, Uber, Didi, Lyft, Ola and many others collectively raised billions of dollars to compete against each other and build out networks of gig workers and customers. Intense competition on a narrow range of services, however, made for very challenging unit economics, so a lot of these companies focused on folding in more services into those apps to improve loyalty and increase customer spend — and thus the so-called “super app” was born. The complexity of integrating different services was a challenge in itself, however, and that was where Splyt stepped in, providing the tech behind the scenes to integrate services and reconcile payments between various parties.
That in itself was enough to bring on SoftBank as an investor. When it led a $19.5 million round in the startup in 2019, SoftBank was a big backer of a number of these on-demand businesses, and it was also in search of its own entry point into the “super app” fray, and so the investment was seen as a way to help it on both of those fronts.
But fast-forward to today, and a lot of the companies running these apps, not to mention SoftBank itself, have been struggling to grow and justify their investment exuberance of past years. All of that may have spelled splitsville for Splyt, but perhaps an opportunity too for Kakao Mobility to pick up the pieces for its own ends.
“We will create a new service that innovates the mobility experience of users around the world by incorporating Kakao Mobility’s platform capabilities into the global super app network that Split has built,” CEO and co-founder of Splyt Philipp Mintchin said.
“We’re thrilled to welcome Splyt, which is the first overseas acquisition [of Kakao Mobility],” said Alex Ryu in a statement. “Kakao Mobility will continue to scale our product and accelerate further global expansions through Splyt, which has unrivaled global competitiveness in the mobility service platform space.”
Source @TechCrunch
