Dragged By LeEco Scandal, YidaoYongche Falls Short Of Capital Chain

摘要: LeEco’s strategic investment and takeover didn’t do much good for YiDao either. The company only replaced YiDao’s management team with LeEco’s staff and gave little help to YiDao’s development. In some way that also contributed to the fact that YiDao has now become a collateral damage of LeEco’s cash crisis.

(Chinese Version)

In last March, five months after taking investment from LeEco, YidaoYongche made up the decision to become the second best player in the cab-hailing sector and announced the concept of the ecosystem of cabs. While the company’s rivals were lowering the subsidy amount, YiDao continued to challenge them with competitive subsidy, increase the cash-back amount and the subsidizing period.

At present, YiDao is being dragged down by its strategic investor LeEco’s scandal as the cab-hailing platform is also having problems with its capital chain.

Although YiDao has denied on the cash bleed for several times, SinaTech has discovered that YiDao fails to pay up its customer service outsourced company. As a result, YiDao has removed its customer service line and only provides email-based customer service and AI customer service. Unfortunately, machines’ reply clearly could not satisfy all those complaining drivers and passengers. The front desk of YiDao’s HQ in Zhongguancun is always flocked with angry drivers and passengers.

As a matter of fact, besides customer service companies, seven other suppliers from the fields of app promotion, SMS promotion etc. couldn’t get payment from YiDao either within the payment deadline stated in the contract. “I owe seven suppliers money, not just you. I don’t have the money now. All we can do is wait for the bank’s move,” YiDao’s president assistant Wang Rui said frankly, replying the collecting suppliers.

Promotion cost YiDao ¥6 million

Since December last year, Liu from AIWOSHI Technology, an app promotion company that had provided service for YiDao, would go to YiDao’s HQ in Zhongguancun at least once a week.

According to Liu, after media first reported that YiDao had failed to pay the final payment to the suppliers on time on December 15th last year, YiDao’s product director drafted a payment schedule which was signed by Wang Rui the president assistant, promising to pay up ¥3,035,604 of the¥6 million payment before January 20th , and the second payment ¥3,414,136 before February 28th.

January 18th, 2017

As the deadline of the first payment came near, Wang Rui told Liu that the loan from bank was not in place yet and asked Liu to wait for another two or three days. “If you trust YiDao, then you wait. If you don’t, then you can undergo legal procedures,” Wang Rui said.

January 24th, 2017

Liu reached out to Wang Rui once again as Liu didn’t get any payment from YiDao. Wang Rui: “At present, the company needs to pay the SMS, customer service, and promotion service providers. Everyday we have a lot of suppliers coming to our door asking for the money.” Then Wang Rui promised to solve the payment issue in the first week after the new year. After then, Wang Rui did wire ¥440,000 to Liu’s company to comfort them. It’s said that other six suppliers also got a payment of ¥400,000 to ¥500,000.

February 10th, 2017

After the new year, Liu approached Wang Rui again and Wang stated that they hadn’t received the loan approval from the bank yet and that on Monday they would have the answer.

On February 13th, 20th,24th, and 27th, Wang Rui continued to delay the payment using the loan approval excuse.

According to Liu, on March 10th Wang Rui was still using the bank as an excuse and refused to pay the rest of the payment. “We only owe you ¥5 million something. I still have to deal with the one whom we owe over ¥10 million to later,” Wang said, refusing to make the payment.

Wang Rui revealed that besides the¥5 million of Liu’s company, YiDao also owes tens of millions dollars to customer service, SMS service providers. And on when YiDao can eventually pay up all the payments, Wang Rui said YiDao is going to have the next financing, and that if the bank couldn’t provide them with a loan, they would pay the debts with the financing.

When speaking about YiDao’s dilemma, Wang Rui stated that it can be mainly attributed to LeEco’s scandal last year, which makes banks very careful with the loan. From Wang’s perspective, YiDao still has a say in the cab-hailing sector. Despite the cash withdrawal delay, there are still lots of drivers and cars operating via YiDao’s platform. Aside from that, YiDao is also actively applying for the cab hailing license from the authority and is expected to get it in mid March.

Recently, SinaTech visited YiDao’s headquarter. Despite the fact that the front desk was swarmed by complaining drivers, YiDao’s office still operated with daily order. There were even people coming in for job interview. According to a staff at YiDao, since the staff customer service is not working currently, there have been issues about slow cash withdrawal, for which reason passengers and drivers come to complain everyday. The police was once called to comfort the crowd.

YiDao even set up a sign telling drivers to go to a designated driver service station so that they wouldn’t affect the operation of the office.

High subsidy makes the cash chain bleed

Besides drivers and suppliers, YiDao’s passengers are also panicking upon the current situation. After entering LeEco’s ecosystem, YiDao has been increasing its cash-back policy. On a celebration party on July 1st 2016, YiDao announced the end of the longest ever 100% cash-back activity that lasted for 224 days. According to the company, around 6.53 million users topped up their account during that period, accumulating a cash volume of ¥6 billion with an average of ¥918 per person.

That said, YiDao has to provide a subsidy of ¥6 billion for the drivers and users in the future to hold up and increase the user retention rate. After the LeEco scandal broke out at the end of last year, YiDao has also been having troubles with its cash chain as it fails to pay its suppliers and some driver encountered trouble withdrawing money from the platform, reported by multiple sources.

Even though Wang Rui has stated openly that YiDao is still operating normally as usual, several consumers have complained to SinaTech about having trouble hailing a cab via YiDao’s app and that their money in the account is not usable. A YiDao user revealed that YiDao has been responding slow to cash withdrawal and user complaint, and for that many drivers are keeping YiDao’s platform on hold.

LeEco’s strategic investment and takeover didn’t do much good for YiDao either. The company only replaced YiDao’s management team with LeEco’s staff and gave little help to YiDao’s development. In some way that also contributed to the fact that YiDao has now become a collateral damage of LeEco’s cash crisis.

Another supplier whom YiDao owes money to revealed that once YiDao enters the assets settlement phase, the first thing the company needs to do is pay up its employees, rent, utilities, and tax, and then the suppliers and passengers. That’s why YiDao always mentions that it has to follow the legal protocol. But if the company really wants to rise back on its feet again it would have to solve its cash crisis.

Financing status:

May 2010. Angel round, by Zhen Fund;

August 2011. Series A round, over ten million US dollars, by MorningSide;

April 2013. Series B round, $20 million, by MorningSide, Qualcomm, and CBC Capital; and later Ctrip led the investment of another B round of ¥60 million;

September 2014. Series C round by GIC and Ctrip, over 100 million US dollars.

In October 2015, LeSEE acquired 70% of YiDao’s shares at $700 million and became the biggest share holder. At that time, the board chair Jia Yueting announced that LeSEE would build the ecosystem of cabs with YiDao, claiming that the cab service would be free in the future.

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[The article is published and edited with authorization from the author @SinaTech, please note source and hyperlink when reproduce.]

Translated by Garrett Lee (Senior Translator at PAGE TO PAGE), working for TMTpost.

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