INTERVIEW: KYMCO Capital aims for synergy in the GBG alliance
KYMCO Capital Managing Partner Gary Ting spoke about the venture capital fund’s investment in GBG Express, a delivery subsidiary of Taiwan Taxi, and his take on electric scooter fleet management with Taipei Times reporter Lisa Wang on July 7.
Taipei Times: What’s the story behind KYMCO Capital (金庫 資本) ‘s decision to invest in GBG Express (全球 快遞), a low profile freight delivery company?
Gary Ting (丁學文): The fund wants to invest in electric mobility and we are looking to expand our portfolios. About two years ago, the fund invested in Southeast Asian carpooling start-up Grab, as the company has a better understanding of how the e-mobility ecosystem is shaping up in markets and how to communicate with it. venture capital. Grab is set to launch a first public offering in the United States via a merger of special purpose acquisition companies later this year, faster than initially expected, 2023. Through cooperation with Grab, we have accumulated a lot know-how on how to manage a fleet, how to use and analyze the data we collect and how to properly tell and sell a start-up’s stories to customers and investors.
The investment in GBG Express came unexpectedly. We were looking for new investment targets in electric mobility abroad. We had barely heard of GBG Express until Grab mentioned the company. Grab said he visited Taiwan Taxi (台灣 大 車隊) when the business was started about eight years ago, as the Grab team tried to learn from Taiwan Taxi on how to manage a fleet using of technology. GBG Express is a delivery subsidiary of Taiwan Taxi.
Photo: Amy Yang, Taipei Times
Compared to most start-ups, Taiwan Taxi and GBG Express operate in a relatively traditional way. They’ve developed a lot of great services and products, but they’re not good at selling their stories to investors. KYMCO Capital knows how to sell and knows what interests investors. This is where we can help you.
TT: What plans does the KYMCO Capital fund have to help GBG Express grow?
Ting: The role of KYMCO Capital is to provide a platform for companies, start-ups, future unicorns – invested by the fund or by the fund’s investors – to take advantage of each other’s strengths. In the case of GBG Express, KYMCO (光 陽), a scooter and motorcycle manufacturing giant and one of the fund’s investors, can supply its Ionex electric scooters to help GBG Express electrify its fleet. At the same time, KYMCO will see its sales increase by adding a new sales channel through the start-up GBG Express, which has 26,000 passengers. [GBG Express plans to have 50 percent of its riders on electric scooters by 2023.] KYMCO mainly sells its scooters and motorcycles through distributors as do most traditional scooter manufacturers.
In addition, KYMCO battery exchange stations will be available for GBG Express passengers to find fully charged batteries between races. GBG Express may also choose to install micro battery exchange stations in the rest areas it shares with Taiwan Mobile taxi drivers.
The fund has also invested in several software start-ups, which can help create new software, powered by artificial intelligence, allowing GBG Express passengers 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. It will work the same way Grab currently works. 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 move production lines to the region amid trade disputes
between the United States and China. In addition, Thailand and Indonesia are among the top travel destinations for Taiwanese. We could leverage Grab’s market position in the region by integrating Taiwan Taxi’s 55688 app with Grab’s to provide ridesharing and delivery services. The first step will be to introduce electric vehicles, manufactured by KYMCO and adopted by GrabWheel users, to GBG Express home. This will likely happen this fall, once the scheduled transaction is completed at the end of this month. With an amount of NT $ 180 million [US$6.43 million] investment, the fund will hold a 26.47% stake in GBG Express, which is valued at NT $ 500 million. This will give KYMCO Capital a seat on the board of directors of the delivery company.
TT: What is the competitive advantage of GBG Express?
Ting: GBG Express focuses on business-to-business (B2B) service, providing last mile products 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 customer data for its customers for further big data analysis, while its B2C service providers tend to own the data and not make it available to retailers.
In a way, GBG Express is a contracted fleet for its customers, 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 additional logistics management other than inventory management. The COVID-19 pandemic has accelerated the digitalization of businesses, as most consumers shop online to avoid direct contact. This leads to faster digitization for retailers.
Another advantage of operating a B2B model is that it is easier to generate profit than with fleets of electric scooters focusing on B2C activities. Electric two-wheelers are still much more expensive than gasoline scooters. Without government subsidies, it is unaffordable for the mass market.
GBG Express has made decent profits as corporate clients and government agencies have deeper pockets and are more willing to spend on new services.
Comments will be moderated. Keep comments relevant to the article. Comments containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. The final decision will be at the discretion of the Taipei Times.