After years of explosive growth and massive funding rounds, it’s time for consolidation in the micromobility industry. Grandstand and Dott, two leading European companies in the space, have announced plans to merge. The transaction is expected to close within two months of today’s news.
This should come as no surprise, as many free-floating scooter and e-bike companies have struggled in recent months. Just a few days ago Superpedestrian announced that it will be closing. Bird also filed for bankruptcy in late December.
Tier has had its own problems as the company recently laid off 22% of its workforce, representing 180 staff members. It also began offloading some of its operations to better focus on its core business. For example, he sold Spin to Bird for $19 million—this was before Bird filed for bankruptcy.
That’s why Dott and Tier are going to combine their teams and activities. With thin margins, micromobility is all about scaling to the next level to eventually reach profitability.
Details are still scarce as Tier and Dott announced the merger to their respective teams just a few minutes ago. Both companies will now sit down in the coming weeks to figure out how they plan to operate as a company going forward.
For now, nothing changes — both apps will remain available on the App Store and Google Play Store. Dott and Tier will continue to be available in more than 20 countries — primarily in Europe. Some of the companies main markets are Berlin, Brussels, Dubai, Helsinki, London, Madrid, Paris, Rome, Tel Aviv and Warsaw.
Another 60 million euros in funding
What is changing is the leadership team. Lawrence Leuschner, co-founder and CEO of Tier, will become chairman. It is not yet clear whether he will have an operational role at the company going forward.
Henri Moissinac, co-founder and CEO of Dott, will be the CEO of the new company. Maxim Romain, who was Dott’s COO, will remain as COO of the combined entity. And finally, Tier CFO Alex Gayer will retain his position as CFO.
Some of Tier’s and Dott’s existing investors are putting more money into the new entity. Mubadala Capital and Sofina are leading this new funding round. They were both investors in Tier and Dott, respectively. It also acquired Spin to expand into North America.
But that is not all. Estari, M&G, Naspers, Novator and White Star Capital also participate 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 the terms of the deal remain unknown, Dott and Tier’s total valuation is likely reduced compared to their large funding rounds in 2021 and 2022.
“Valuations had reached very high levels. And inevitably, in terms of the tech industry itself, there have been some adjustments,” Dott policy and communications director Matthieu Faure told me.
Two different approaches
While Tier and Dott operate scooter-sharing and bike-sharing services in major European cities and work with Ninebot and Okai as their hardware suppliers, they’ve had different approaches over the years.
Dott currently operates in seven countries representing 40 cities. It has 40,000 scooters and 10,000 bicycles 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).
Since the beginning, Dott has chosen 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 is developed in-house.
Tier has expanded to more markets and cities, as it is currently available in Germany, Austria and Poland, as well as Qatar, Saudi Arabia and the United Arab Emirates.
He’s also tried a bunch of different things. For example, it acquired Coup, an electric moped service that operated mostly in Berlin. When the company raised the Series C round, it claimed it would build a network of user-swappable batteries in European cities.
Tier also acquired Nextbike, one of Europe’s leading bike-sharing companies with a more traditional dock-based system. In total, Tier now has 2,000 employees when including all frontline and Nextbike employees.
Now that VC funding has dried up and it’s time to focus on profitability, Tier and Dott may need to refocus slightly to make sure they can turn a profit in their core markets.
“Today, our operating model is quite good. We manage to be profitable in most of our cities. We’re just lagging behind in terms of 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 to be sustainable in the long term.”
Tier currently generates more revenue than Dott. After the merger, the new micromobility company expects to generate more than 200 million euros ($220 million) in revenue. And, hopefully, they will be able to turn a profit.
