The mobility of cocoaThe ride-hailing subsidiary of South Korean messaging and Internet giant Kakao has made its first acquisition as it tries to raise its global profile. It acquired London-based startup Split, which works on apps like travel, ride-hailing and finance, to help build “super app” strategies by integrating other services.
Kakao Mobility already works with Split, and wants to use the asset to fuel global expansion plans in Southeast Asia and Europe. Kakao Mobility currently offers limited services in 30 markets outside of South Korea, most recently in Guam last year and Laos earlier this year.
Splyt and Kakao’s mobility technology teams have been collaborating since 2019 to integrate and enable ride-hailing for Kakao T users through Splyt’s ride-hailing API platform, Splyt’s CTO Stephen Mason told TechCrunch.
The financial terms of the deal are not being disclosed, but there are some indications that it may not be a great deal for this super app maker.
Split says its service is used by more than 2 billion people in 150 countries, including Alipay, Uber, Binance, Grab, Trip.com, Booking.com, Kakao itself and 70 other customers. But after a flurry of activity over the past several years — including $33.5 million in pitchbook data from SoftBank, Grab, AmEx and others — Splyt stopped providing updates about its business in July 2022.
The acquisition will include technology and talent. Split has about 30 employees, and they join the cocoa movement. A spokeswoman for the latter company said that Split Key’s management team will be moving to South Korea to continue organizing the team into Kakao Mobility. (Kakao Mobility has about 950 employees.)
It is not yet clear how Kakao Mobility plans to use Split’s technology: using it as a lever to work with more international partners, or Kakao Mobility’s own app, KakaoT. It currently has around 32 million registered users.
Kakao Mobility itself is at a crossroads as a business: the company was partially spun off from Kakao Corporation in 2017, and is still 58 percent owned. But last year, after pushback from drivers and workers, Kakao had to shelve plans to sell part of that stake to a PE firm. Further plans for an IPO have been put on hold during the current bullish market for technology stocks.
Other investors in the mobility business include Carlyle, TPG, LG and Google, which have invested more than $840 million. A report in the Korea Economic Daily last year estimated that Kakao Mobility — which, in addition to ride-hailing, also works in parking search, navigation, bicycle rental and autonomous driving — was valued at $6.5 billion.
The emergence of Splyt as a business speaks to a specific moment in the on-demand service market. Apps like Grab, Uber, Didi, Lyft, Ola and many others have raised billions of dollars to compete with each other and develop a network of gig workers and customers. But intense competition on a narrow range of services made for very challenging unit economics, so many of these companies focused on folding additional 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 That was a challenge in itself, but that was where Split stepped in, providing the technology behind the scenes to integrate services and reconcile payments between different parties.
That in itself was enough to bring in SoftBank as an investor. In the year When it led a $19.5 million round at the 2019 startup, SoftBank was a big supporter of these on-demand businesses, and was looking for its own entry point into the “super app” race, and the investment was seen as a way to help both sides.
But with today’s rapid growth and many companies running these apps, SoftBank, not to mention itself, has been struggling to justify and increase their investment excitement over the years. All that split may have spelled splitsville, but it could be an opportunity for Kakao Mobility to pick up the pieces for its own interests.
“By incorporating the capabilities of the Kakao Mobility platform into the global super app network that Split has built, we are creating a new service that will revolutionize the mobility experience for users around the world,” said Split CEO and Founder Philip Minchin.
“We are delighted to welcome Split, the first overseas purchase. [of Kakao Mobility]” Alex Ryu said in a statement. “With Split, Kakao Mobility has an unrivaled global competitive edge in the mobility services platform space and will continue to expand our product and accelerate further international expansions.”
