A range of products from the Estonian start-up Bolt.
LONDON – Competition is getting tougher for Uber in Europe.
Estonia-based start-up company Bolt said on Tuesday that it has raised 628 million euros ($ 711 million) in a new round of financing led by Sequoia Capital and Fidelity.
The investment, which was also supported by Whale Rock, Owl Rock and some of Bolt̵[ads1]7;s existing investors, values the eight-year-old company at 7.4 billion euros – or about $ 8.4 billion – up from almost $ 4.8 billion for just five months ago.
“Cities are increasingly looking to switch from private car ownership” to driving and other “shared mobility” options such as electric scooters and car sharing, Bolt CEO and co-founder Markus Villig told CNBC in an interview.
Bolt was founded in 2013, and has become a tough competitor to Uber, challenging the American giant that comes with tour in key markets such as London and Paris. It has since expanded to several other industries, including online food and grocery delivery and e-scooters.
Willingly said that investors are beginning to see the value of the “superapp”, a concept that includes several services combined into one platform. The trend is especially popular in parts of Asia, but has been slower to take off in Europe and North America. Bolt says they now have 100 million customers in 45 countries in Europe and Africa.
‘No urgency’ for listing
It has been almost three years since Uber was listed on the stock exchange, and the stock has been in a whirlwind ever since, reaching all-time highs in 2021 before falling back below its debut price. Asked if Bolt could follow suit by applying for a listed offer, Villig said that there is more than enough money available in the private markets.
“In the long run? Most likely, yes, we will go public,” he said. But, he added, “it is not urgent for us at the moment.”
Willing to look at grocery on demand as a key focus area for the company in the coming years. The sector has become intensely crowded, with an influx of start-ups from Getir to Gorillas wanting to lure consumers away from convenience stores and supermarkets with the promise of ultra-fast delivery times.
Bolt launched its own 15-minute grocery delivery service, called Bolt Market, in Estonia last year. Like competing services, the company relies on so-called dark grocery stores that only place online orders and do not serve in-store customers. It is now live in 10 countries, with dozens of dark shops set up. The company sees remarkable traction in Central and Eastern Europe, Villig said, adding that they plan to open hundreds of new websites this year.
Bolt’s CEO said the company will likely spend “hundreds of millions” on expanding its grocery business over the years. He questioned the sustainability of companies with fast delivery of groceries, and noticed that the industry operates with small profit margins.
“This is not the software industry,” Villig said. “This is going to be a highly competitive operating business. Most of these companies that expect this to be a massive profit driver will all be very disappointed in a few years.”
Bolt often maintains its operating model as slimmer and more cost-effective compared to Ubers. The company lost 44.9 million euros in 2020, according to its latest financial report, somewhat down from a loss of 85.5 million euros a year earlier. Revenue rose almost 75% to 221.4 million euros.
Uber, which has long been plagued by concerns about whether it could become a profitable business, reported its first adjusted EBITDA result (profit before interest, taxes, depreciation and amortization) in the third quarter of 2021.
Bolt’s business was initially hit hard by the coronavirus pandemic, with revenues plunging as much as 80% in 2020. The company looked to food delivery and other areas to increase its business when times got tough and has benefited from the growing demand for tour visits. . post-lockdown. According to Willing, Bolt’s tour delivery business more than doubled in 2021.
However, Uber and its competitors have struggled to match that demand with a supply of drivers amid ongoing labor shortages. This has led to higher prices and unusually long waiting times in big cities such as London and New York.
“Everyone is fighting for the drivers,” Villig told CNBC. “We have always been positioned as the most driver-friendly platform out there, in terms of better earnings, better treatment and so on.”
In November, Uber said it would raise prices in London in an effort to attract more drivers, while Bolt has allowed drivers to set their own prices in three UK cities.
Nevertheless, Bolt faces much of the regulatory risk that Uber has encountered over the years, from a landmark British court ruling last year that Uber’s drivers should be treated as workers, to incoming European regulations that threaten to upgrade the business model to gig-economic platforms.
Willingly said that most of Bolt’s drivers prefer the flexibility that comes with playing jobs and do not want to be treated as employees – a term that will give them important benefits such as minimum wage and holiday pay.
“We believe that common sense will prevail in the long run,” said Villig. “I do not think it makes sense to force them all into a model that they actually do not want.” Most countries are likely to find a “flexible system” that enables both full-time and flexible working hours, he added.