SoftBank leads a $ 250 million funding in Tier in its first ever e-scooter guess
A woman holds her smartphone with the app of the electric scooter sharing provider Tier Mobility next to an e-scooter to use it. Hauke-Christian Dittrich / dpa (Photo by Hauke-Christian Dittrich / image alliance via Getty Images)
Hauke-Christian Dittrich | Image alliance via Getty Images
LONDON – German electric scooter rental company Tier announced Tuesday that it has raised $ 250 million in a funding round led by SoftBank’s second Vision Fund.
It’s the first time the Japanese tech investor has placed a bet on the nascent scooter-sharing space and a number of countries in Europe are being re-locked to slow the resurgence of coronavirus cases. E-scooter companies were hard hit by the first round of lockdowns as a number of vendors cut jobs in order to survive.
Tier says it hasn’t had to make layoffs related to the pandemic. A spokesman told CNBC that the company made “one or two performance-related adjustments as part of normal business practice, but nothing else.”
SoftBank made the investment in Tier through Vision Fund 2, a successor to its original $ 108 billion technology fund that shamed WeWork for its tough bet on the office rental service. The round was also supported by existing investors such as Mubadala, Northzone, Goodwater Capital, White Star Capital, Novator and RTP Global.
However, Mubadala did not invest in Tier as part of Vision Fund 2. The Abu Dhabi sovereign wealth fund contributed to SoftBank’s first Vision Fund but was reluctant to support the new fund, as CNBC reported in May.
Tier is now close to $ 1 billion, according to the Financial Times, which first covered the news. That means it is about to secure a so-called “unicorn” rating and is, according to FT, the second most important e-scooter company after Bird – the overtaking of Lime.
Some e-scooter start-ups said that demand recovered rapidly in the summer as the economies reopened. Many have tried to participate in trials in the UK while the country is investigating e-scooter legalization.
However, fears remain about the sector’s financial sustainability, especially as some European countries re-enter lockdowns and winter approaches. Still, Tier achieved profitability for the first time this year.
Tier has been profitable since June, the company’s CEO Lawrence Leuschner said in a recent interview with CNBC. “We will be very close to full profitability this year,” he added.
Tier said it would use the fresh money to expand in Europe and install thousands of charging stations in different cities to power its vehicles. The company, which launched its own electric scooter sharing service in May, said it also wants to secure additional debt funding for introducing more vehicles.
“Micromobility fills a huge gap created by traditional city car usage and represents a viable alternative to traditional transportation systems,” said Yanni Pipilis, Managing Partner at SoftBank Investment Advisers. “Tier has a proven track record of building longstanding partnerships with cities and regulators combined with a technology-driven approach to developing leading customer proposals.”