SoftBank Leads $ 250 Million Investment in Tier in First Electric Scooter Bet

LONDON – German electric scooter rental company Tier announced on Tuesday it has raised $ 250 million in a funding round led by SoftBank’s second Vision fund.

This is the first time the Japanese tech investor has made a bet on the nascent scooter-sharing space and comes as a number of countries in Europe enter lockdowns to slow the resurgence of coronavirus cases. Electric scooter companies have been hit hard by the first round of lockdowns, with a number of suppliers cutting jobs to survive.

For his part, Tier says he has not had to make any layoffs related to the pandemic. A spokesperson told CNBC the company “made a performance-related tweak or two as part of standard business practice, but nothing outside of that.”

SoftBank has invested in Tier through Vision Fund 2, a $ 108 billion successor to its original tech fund that gained notoriety for its troubled bet on the WeWork office rental service. The round also attracted support from existing investors, including 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 – as CNBC reported in May – he was hesitant to support the new fund.

According to the Financial Times, which first broke the news, Tier is now valued at just under $ 1 billion. That means it’s on the verge of getting a so-called ‘unicorn’ rating and, according to the FT, makes it the second most valuable electric scooter company after Bird – surpassing Lime.

Some electric scooter start-ups claim to have seen a rapid recovery in demand over the summer as economies reopened. Many have raced to participate in trials in the UK as the country explores the legalization of e-scooters.

But fears persist about the financial viability of the sector, particularly as a number of European countries re-enter lockdowns and the approach of winter. Nonetheless, Tier claims to have managed to achieve profitability for the first time this year.

Tier has been profitable since June, company CEO Lawrence Leuschner told CNBC in a recent interview. “We will be very close to full profitability this year,” he added.

Tier said it would use the new money to expand in Europe and install thousands of charging stations in various cities to power its vehicles. The company, which launched its own electric moped sharing service in May, said it was also looking to secure additional debt financing to deploy more vehicles.

“Micro-mobility fills a big void left by traditional city car use and presents a viable alternative to legacy transit systems,” said Yanni Pipilis, Managing Partner at SoftBank Investment Advisers. “Tier has a proven track record of building long-standing partnerships with cities and regulators, combined with a technological approach to develop leading customer propositions.”