2024-01-11 23:01:06
Tier has been looking for a buyer for months. But following having discussed with almost all the big players in the sector – in particular the Estonian Bolt, with which an agreement seemed close in the spring – the German platform for self-service rental of electric scooters did not find a buyer. The fault in particular is a debt estimated at 100 million euros, explains the site Sifted. Instead, it announced on Wednesday that it would merge with Dott, its smaller Dutch rival. The operation, which should be finalized over the next three months, will create the European leader in the scooter market. Above all, it must allow the two companies to generate synergies, with the hope of ultimately achieving profitability.
Heavy losses – Both founded in 2018, Tier and Dott are part of the wave of European start-ups that have surfed the scooter trend in free floating (without Borders). Taking advantage of the appetite of investors, who are betting on the growth of micromobility in city centers, they were able to raise substantial sums: 650 million dollars for the German company and 230 million for the Dutch company. But they have also accumulated heavy losses, in a very competitive market which requires rapid deployment in many cities. This strategy was tenable as long as funding continued. But the tightening of monetary policies to fight inflation caused a drop in fundraisingin particular for start-ups with an uncertain economic model.
Dott in charge – More aggressive than Dott in its expansion, Tier encountered the most difficulties. Like its rivals, it had to abandon its obsession with growth to seek to become profitable. The start-up has carried out several waves of layoffs, the latest in November when it cut 22% of its workforce. It abandoned several markets and stopped renting electric scooters. And also selling the subsidiary Spin, bought back in early 2022, sounding the death knell for its American ambitions. Last spring, Tier failed to raise essential funds, forcing it to go into debt to survive while it found a buyer, which never arrived. Cornered, its leaders had to agree to leave control of the new entity to those responsible for Dott.
Profitable in 2024? – The merger between the two platforms is accompanied by additional financing of 60 million euros, from existing investors, on the basis of a reduced valuation, according to the German newspaper Manager Magazine at just 150 million – compared to two billion for Tier in 2021. This sum will give a little breathing room to the new group, which promises to become profitable on an adjusted basis in 2024. After years of losses, market players are indeed starting to to see better days, in particular thanks to more robust scooters, capable of being amortized over a longer period, and the transition to removable batteries, lowering recharging costs. And market consolidation also helps limit competition in large cities.
For further:
– Bird, the pioneer of electric scooters, files for bankruptcy
– Spin, symbol of the eventful history of electric scooters
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