COVID-19 has hit the micromobility world hard, with companies reeling from the change in consumer transportation habits. But Europe’s Tier appears to be bucking the trend. The startup managed to turn profitable this year and stands on the cusp of an ambitious new product launch.
Confirming this momentum, Tier today announced it has raised $250 million in a round led by the Softbank Vision Fund. The round included participation from Mubadala Capital, Northzone, Goodwater Capital, White Star Capital, Novator, and RTP Global.
In addition to expanding its escooter service, Tier is preparing to roll out a new battery charging network it hopes will further its goal of supporting the shift to a circular economy.
“By building energy infrastructure, it shows how much we think about micromobility beyond scooters,” said Tier CEO and cofounder Lawrence Leuschner. “It’s not just about placing scooters and placing more scooters. We have a clear strategy for the next several years, and therefore we need some capital to fulfill our vision.”
Founded in 2018, Tier has tightly focused on the European market, even as U.S.-based competitors like Bird and Lime have made big inroads in the region. Berlin-based Tier currently has 60,000 scooters across 80 cities in 10 countries.
And while micromobility companies all claim to offer some positive benefits for the environment, Tier has gone a step further with an escooter system designed to optimize its impact. Leuschner has also pledged to donate 100% of any money he makes on shares from a Tier exit to an investment vehicle he created to back “impact entrepreneurs.”
In building Tier, Leuschner first focused on improving the durability of the company’s scooters. Tier was also formed as an operations company, embracing every aspect of managing its scooter fleets, rather than outsourcing maintenance and charging to gig workers. Keeping everything in-house has allowed Tier to extend the life of its scooters and reduce their environmental impact.
This is also what allowed the company to turn profitable this year, Leuschner said. And while rivals such as Bird and Lime announced layoffs soon after the pandemic took hold, Tier decided to retain all employees.
“We figured out that we were going to take this crisis as an opportunity,” Leuschner said. “And we decided that we’re going to go and actually deploy scooters and grow the company during those times while others are taking the scooters off the market.”
During the early micromobility frenzy two years ago, Tier faced a massive funding deficit compared to Bird and Lime, which were raising hundreds of millions of dollars. While Tier hasn’t entirely closed that gap, its new $250 million round adds to the $100 million the company has already raised.
With the latest investment, Tier plans to expand its network of cities in Europe. But after a successful pilot project, it is also preparing to launch the Tier Energy Network.
Last year, the company began shifting to scooters that had swappable batteries. Using bikes and electric vehicles, Tier employees carry around charged batteries and replace existing batteries, rather than using trucks to carry the scooters to charging stations.
To further reduce the environmental impact of its charging operation, Tier will now begin placing battery charging stations in local merchants’ shops. The company will offer incentives such as free rides to its users if they take a battery from the scooter to the charging station and retrieve a fully charged battery. For merchants, the charging stations promise to attract extra foot traffic, Leuschner said.
The company’s capital plan includes raising some additional debt financing, as well as venture capital, as it seeks to fund its infrastructure through borrowing rather than selling ownership stakes.
Northzone general partner Paul Murphy noted that his firm first invested in Tier almost two years ago, before it had even launched. Partners were extremely impressed by Leuschner’s vision and have since become even more convinced that he’s on the right path.
“This round is the biggest check that we’ve written so far,” Murphy said. “For us, this is about doubling down on something that’s clearly working.”