After years of explosive growth and massive funding rounds, two of the leading European micromobility companies, Tier and Dott, have announced their plan to merge. The transaction is expected to close within two months of today’s news.
Key Takeaway
Tier and Dott, two major players in the micromobility industry, have announced their plan to merge in response to the industry’s challenges, aiming to achieve profitability through consolidation and scaling.
Struggles in the Micromobility Industry
Many free-floating scooter and e-bike companies have been facing challenges in recent months. Superpedestrian announced its shutdown, and Bird filed for bankruptcy at the end of December. Tier also faced its own issues, including laying off 22% of its workforce and selling Spin to Bird before the latter’s bankruptcy filing.
Combining Forces for Profitability
Tier and Dott aim to combine their teams and operations to address the industry’s razor-thin margins and work towards profitability. The details of the merger are still being finalized, and both companies plan to operate independently for the time being.
New Leadership and Funding
Following the merger, Tier’s co-founder and CEO will become chairman, while Dott’s co-founder and CEO will lead the new company. Additionally, existing investors, including Mubadala Capital and Sofina, are leading a new funding round for the merged entity.
Different Approaches and Market Presence
Despite both offering scooter-sharing and bike-sharing services in major European cities, Tier and Dott have had different operational approaches and market presence. Dott operates in seven countries and has focused on internalizing its operations, while Tier has expanded to more markets and cities, experimenting with various services and acquisitions.
Focus on Profitability
With the decline in VC funding, Tier and Dott are now looking to refocus on profitability. Dott’s Matthieu Faure mentioned that their operating model is profitable in most cities, and Tier expects to generate more than €200 million in revenue after the merger, aiming to achieve profitability in the long term.