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Micromobility startups Tier and Dott plan to merge to find a path to profitability
January 10, 2024

Micromobility startups Tier and Dott plan to merge to find a path to profitability

Reading Time: 3 minutes

After years of exploding growth and massive funding rounds, it’s time for consolidation in the micromobility industry. Tier and Dott, two leading European companies in the space, have announced that they plan to merge. Transaction is expected to close within two months of today’s news.

This shouldn’t come as a surprise as many free-floating scooter and e-bike companies have been struggling over the last few months. Just a few days ago, Superpedestrian announced that it would shut down. Bird also filed for bankruptcy at the end of December.

Tier has had issues of its own as the company recently laid off 22% of its workforce, representing 180 staff members. It also started offloading some of its activities to better focus on its core business. For instance, it sold Spin to Bird for $19 million — that was before Bird filed for bankruptcy.

That’s why Dott and Tier are going to combine their teams and operations. With razor-thin margins, micromobility is all about scaling to the next level to eventually reach profitability.

Details are still thin as Tier and Dott announced the merger to their respective teams just a few minutes ago. Both companies will now sit down over the coming weeks to figure out how they plan to operate as a company going forward.

For now, nothing is changing — both applications will remain available in the App Store and Google Play Store. Dott and Tier will still be available in more than 20 countries — mostly in Europe. Some of the companies’ main markets are Berlin, Brussels, Dubai, Helsinki, London, Madrid, Paris, Rome, Tel Aviv and Warsaw.

Another €60 million in funding

What’s changing is the leadership team. Lawrence Leuschner, Tier’s co-founder and CEO, will become chairman. It’s still unclear whether he will have an operational role in the company going forward.

Henri Moissinac, Dott’s co-founder and CEO, will be the CEO of the new company. Maxim Romain, who was the COO of Dott, will remain as COO of the combined entity. And finally, Tier’s CFO Alex Gayer will keep his position as CFO.

Some of Tier’s and Dott’s existing investors are putting more money in the new entity. Mubadala Capital and Sofina are leading this new funding round. They were both investors in Tier and in Dott, respectively. It also acquired Spin to expand to North America.

But that’s not all. Estari, M&G, Naspers, Novator and White Star Capital are also participating in this transaction. It’s worth noting that SoftBank’s Vision Fund 2, one of Tier’s backers, is not participating in this new round.

While terms of the deal remain undisclosed, the total valuation of Dott and Tier is most likely down compared to the big funding rounds of 2021 and 2022.

‘Valuations had reached very high levels. And inevitably, as for the tech industry itself, there have been some adjustments,’ Dott’s director of policy and communications Matthieu Faure told me.

Two different approaches

While Tier and Dott both operate scooter-sharing and bike-sharing services in major European cities and both work with Ninebot and Okai as their hardware suppliers, they have had different approaches over the years.

Dott is currently active in seven countries representing 40 cities. It has 40,000 scooters and 10,000 bikes and a staff of 600 employees. Dott has raised a total of €210 million in equity and debt ($230 million at today’s exchange rate).

From the very beginning, Dott chose to internalize its operations teams as much as possible and has focused exclusively on free-floating micromobility services. As for Dott’s software stack, everything has been developed in house.

Tier has expanded to more markets and more cities as it is currently available in Germany, Austria and Poland, but also Qatar, Saudi Arabia and the United Arab Emirates.

It has also tried a bunch of different things. For instance, it acquired Coup, an electric moped service that mostly operated in Berlin. When the company raised its Series C round, it claimed that it would build a network of user-swappable batteries in European cities.

Tier also acquired Nextbike, one of the leading bike-sharing company in Europe with a more traditional dock-based system. Overall, Tier now has 2,000 employees when you include all frontline and Nextbike workers.

Now that VC funding has dried up and that it’s time to focus on profitability, Tier and Dott may have to refocus slightly to make sure that they can generate profits in their main markets.

‘Today, our operating model is pretty good. We manage to be profitable in most of our cities. We’re just lagging behind when it comes to scale,’ Dott’s Matthieu Faure told me. ‘Now, we have the best of both worlds with enough vehicles and a good operating and financial model, so that it’s sustainable over the long term.’

Tier currently generates more revenue than Dott. After the merger, the new micromobility company expects to generate more than €200 million in revenue ($220 million). And, hopefully, they’ll be able to turn a profit.

Reference: https://techcrunch.com/2024/01/10/micromobility-startups-tier-and-dott-plan-to-merge-to-find-a-path-to-profitability/

Ref: techcrunch

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