The platform, a rival to Uber, plans to use newly-raised funds to expand its ride-hailing, scooter rental, car sharing, and delivery businesses.
Business presenter
Tuesday 11 January 2022 19:34, UK
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One of the big finance themes of 2021 was the huge amount of money poured into tech companies by the venture capital sector – and, to judge from fund-raisings already this year, 2022 looks like being no different.
Today brought one of the most eye-catching fund-raisings in recent months with news that Bolt, the Estonian business that describes itself as “Europe’s leading mobility platform and first super-app”, has raised €628m (£524m).
The funding round, backed by investors including Silicon Valley-based venture capital hotshots Sequoia Capital and the asset management giant Fidelity, values Bolt at €7.4bn (£6.2bn).
It comes barely five months after Bolt’s last funding round was completed which, at the time, valued it at €4bn (£3.3bn).
In other words, in just 135 days, Bolt’s worth has increased by €3.4bn (£2.8bn) – or just under €25.2m (£21m) every day.
Not bad for a business that was founded only nine years ago with a budget of just €5,000 (£4,200) by a man, Markus Villig, who at the time was just 19 years old and still in high school.
Mr Villig said today that the funding would be used to accelerate Bolt’s mission of reducing private car ownership and help build a future in which cities have less congestion, less pollution and more green spaces.
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He told Sky News: “What we see across Europe today is that cities want to move away from private car ownership onto shared mobility and into using light electric vehicles, especially bikes, scooters and mopeds, and Bolt is really leading that transition.
“That is what this funding round is now symbolising.”
Mr Villig said that the capital raised in the funding round would be used to expand all of the activities in which it is currently engaged – ride-hailing, scooter rental, car sharing, food and grocery delivery.
These are of course highly competitive markets – pitching Bolt directly against, for example, Uber in ride-hailing; Zipcar in car-sharing; Tier and Voi in e-scooter rental; Just Eat, DoorDash and Deliveroo in food delivery and the likes of Gorillas and Getir in grocery delivery.
But Mr Villig insisted the company was not trying to do too much at once.
He went on: “What we see, rather, is that the benefits of this platform are really kicking in over the last year or so.
“When you look at the cost structure of most of these companies, what they spend most of their funding on is marketing – because each of them, independently, has to acquire the same segment of customers.
“What we are able to do is that, with 100 million users already with our ride-hailing product, it’s very easy and natural for them to start using our other products as well.
“So we can take the money that these other companies spend on marketing and pass it on as savings – so that the customers pay less for the same service and our partners, rather that’s couriers, drivers or restaurants, they make more.
“So really everybody wins when we operate multiple products on the same [tech] ecosystem.”
Bolt, which operates in 45 countries and in more than 400 cities across Europe and Africa, is also seeking to draw distinctions between itself and its best-known rival, Uber, in other respects.
A high court ruling late last year found Uber had a contractual relationship with all passengers once they had booked a ride with it.
The ruling brought clarity to an earlier ruling last year in the supreme court that Uber’s drivers are employees and not just contractors.
It means that Uber must now pay its drivers holiday pay and pension contributions and the expectation is that other private hire operators will now have to do the same.
But Mr Villig insisted that Bolt, which is present in 16 UK cities including London, Edinburgh, Birmingham, Bristol, Derby and Newcastle upon Tyne, was not rushing to do this.
“We actually see that the vast majority of drivers and couriers like the current model,” he said.
“Most of them want the flexibility and they want to stay independent.
“We don’t think forcing all of them into one model makes sense – we think there needs to be some sort of hybrid solution can also retain doing that.”
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He insisted that Bolt was improving on the gig economy model first developed by Uber.
“The biggest reason Bolt has had so much success over the years is because we are the most partner-friendly platform there is,” Mr Villig said.
“Drivers are making more with us on every order than they do with other platforms and they also get better treatment.
“When you contrast our growth over the last two years with that of other platforms, we are driving multiple times faster, and that’s the reason.”
He cited the decision in November last year to allow drivers in three cities to set their own prices as an example of how Bolt gave drivers more flexibility.
Mr Villig said the first results of that experiment “seem to be great” and that the arrangement was likely to be rolled out across other European cities.
Today’s fund-raising is a clear endorsement of that business model from some of the world’s canniest investors.
And it may be that Bolt’s “super-app” platform may save it some marketing costs.
But the loss-making company – a loss of €44.9m (£37.4m) in 2020 following one of €85.5m (£71.3m) in 2019 – still has to make heavy investment as it rolls out its services in new locations.
Africa, with its growing population and its lack of established transport infrastructure, is seen as a particularly attractive market.
It is also looking to recruit more people: Mr Villig said before Christmas he was deciding whether to build a head office, housing between 4-5,000 employees, in either Estonia’s capital, Tallinn, or in another European country such as Poland or Romania.
Even after today’s funding round, Bolt’s €7.4bn (£6.2bn) is still small compared with many of the companies with which it is competing, such as Uber ($82.6bn or £60.8bn), DoorDash ($45.8bn or £33.7bn), Delivery Hero (€20.6billion or £17.2bn) and Just Eat (€9bn or £7.5bn).
Given the rate at which it has grown, though, they would be unwise to underestimate it.
Particularly since Mr Villig founded his company in the first instance because the local taxi service in Tallinn was so poor but Uber had yet to enter the market.
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