Sharing the Ride: Our Investment in TIER Mobility
Our Berlin-based portfolio company TIER Mobility is barely one year old. But, for me, the history of the company starts 11 years ago. Back in 2008, when I made my first baby steps into the world of European Venture Capital, one of the first companies I was fortunate enough to work with, was a small but fast-growing, Berlin-based company called “trade-a-game” that was building a C2C marketplace for trading video games. Lawrence (Co-Founder & CEO of TIER), Tim and Marcus were the founders behind the company that later rebranded to reBuy, raised millions of Euros and became the leading re-commerce platform for used, refurbished electronics in Germany with over 500 employees generating more than 150M€ in annual revenues.
Approximately one year later, in 2009, I led our (pre-seed) investment into “Yourdelivery” out of Berlin. It was the company’s first financing round, raising €125k through a convertible note on a €800k cap (yes, those were the days!). The founders were Jörg, Kai and Christoph who asked Matthias (Co-Founder & CTO of TIER) to join them as CTO. Today, yourdelivery is called Lieferando, an essential part of listed TakeAway Group which recently announced a merger with British JustEat to form a ≈€10bn European food delivery giant.
Four years later, in 2013, I joined Point Nine Capital in Berlin. My colleague
launches a “Young VC” initiative through which I get to know Julian who is part of the investment team at Partech in Berlin. Julian (Co-Founder of TIER) eventually leaves Partech to launch Coup, the first European E-scooter sharing company, a joint venture between German car supplier Bosch and BCG Digital Ventures.
TIER Mobility one year ago
Fast forward to early 2018, we’ve just launched Speedinvest x and are making our first investments. While in San Francisco for our inaugural The Marketplace Conference in spring 2018, I experience shared e-scooters and e-bikes (JUMP) firsthand. Lime and Bird announce record funding rounds, in record time, at record valuations. After returning to Berlin, I’m bouncing ideas with both Lawrence and Julian, each individually about what could be next for them. At this time, although they live in the same city, they don’t know each other (yet). Both get inspired by the emergence of E-scooters in other parts of the world and ask for my opinion on the topic. My superficial, uneducated comment to each of them is that, in my (poor) opinion, it’s “too late already” as the global “micromobility race” will be decided between Bird and Lime which seem to have a significant head start. Knowing that whatever any of the two would do next (as a founder), I’d be happy to fund it, I connect them to each other as both seem to be seriously interested in the micromobility space and are obsessed with changing urban mobility for the better. A few days later, sometime in early July 2018, Lawrence calls me and says “we’re doing this”. My immediate response is “I want in”. Lawrence convinces Matthias to join as the 3rd and technical co-founder after he’s ready to leave his CTO-gig at TakeAway. Could this get any better?
As a seed investor writing initial checks, I would have been happy to invest in each of them individually; all 3 together at once is a seed investor’s “wet dream”. Shortly thereafter, in August 2018, we sign a Term Sheet for leading a €2M seed round of a yet to be incorporated company called TIER Mobility. In the same month, we close the round led by us, Speedinvest x, with participation of Point Nine Capital. Our initial investment hypothesis is
a) to back an amazing, proven founding team;
b) that consumers have an unfulfilled need for sustainable micromobility; and
c) that there is still a massive opportunity to build a European micromobility champion.
TIER Mobility today
Today, only one year after TIER’s launch and 11 years after I first met Lawrence, the company has just announced its >50M€ Series B. Over the last 12 months, it has
- grown to over 350 (!) employees managed by a stellar management team including, next to Lawrence and Matthias, many European tech-startup veterans such as Alex Gayer (previously at Receipt Bank, Microsoft, Swiftkey), Bodo von Braunmühl (Delivery Hero, Betfair), Simone Rüschenberg (HelloFresh, Soundcloud) or Philipp Haas (MediaMarktSaturn);
- raised a total of almost €100M, thereof more than €50M in its last round that has just been announced;
- an annual revenue run-rate that peaked at well above €130M within less than 12 months after launching;
- launched and is active in 40 cities across 12 countries;
- reached number 1 position in the German App Store within 36 hours after its local launch with no Euro spent on marketing; and
- reached over 10M rides in less than 11 months since launching the service in October 2018 in Vienna.
Considering the above, it’s no surprise that industry expert Horace Dediu recently recognized TIER as the fastest growing mobility company in the world, while being the most efficient player in the industry with the longest vehicle lifetime and therefore best-in-class unit economics.
Having witnessed first hand the incredibly impressive development of companies such as Lieferando, Delivery Hero or Revolut (by the way, all of which have been launched in highly competitive environments), the extremely fast growth and outstanding development of TIER still remains unparalleled for me. I have worked with and invested into dozens of companies over the last 10 years, but I have never seen a company growing as fast and as consistently as TIER — independently of what KPI is used as a benchmark. All of this while being a late mover in a hyper-competitive, extremely fast growing market that has attracted a lot of investment.
To me, the unbelievably fast consumer adoption of E-scooters and other micromobility vehicles is a clear sign that change is overdue and people simply want this. If you add operational excellence, funding and true obsession for the topic to the mix, you’ll get TIER. Lawrence and the team truly want to “change mobility for good” and bring more sustainable means of transportation to the mobility space — it`s not just platitudes. Of course, I’m biased and all of this sounds extremely self-serving, but, having backed the company throughout all financing rounds until to date, we are putting our money where our mouth is. Although TIER is only one year old, it feels like ages to me. Within 12 months TIER went through the same development & phases for which other, VC-backed companies take 3, 4 years or longer. It’s basically the equivalent of dog years vs. human translated into the startup world. Hence, even if the company is officially only a bit over one year old, it looks and feels much older and more mature.
With that in mind and being the very first investor in the company, the time is ripe to share some first, preliminary lessons learned. Many of you would consider most of the following “conventional wisdom”, but it suddenly becomes much more tangible and obvious when you experience it firsthand:
- Importance of reputation and paying it forward: These days, everyone talks about “paying it forward” especially related to long feedback cycles in Venture Capital: TIER is my own prime example of relationships that started 11 years ago and, thus far, culminated in this story.
- “It ain’t over till it’s over”: As an investor, we are in our own echo chamber and we live in a bubble. So, when you think it’s already too late, think twice: It’s usually not and, in fact, it has just begun.
- No a**hole policy: One of the main reasons why we ended up leading the first round of TIER is that we share one, maybe basic, but fundamental principle with the team: A no a**hole policy for whom we do business with. The basis for our work is mutual respect and high ethical standards.
- Invest in and build stuff that people really want: If you build something that people truly desire, no one can stop you and you will be able to extract great value from it.
- Serial entrepreneurs & home field advantage: To me, the story of TIER underlines the true value of previous entrepreneurial experience. Execution i.e. operational excellence is everything in a hyper-competitive environment and can be a USP. Never underestimate execution capabilities of proven leaders combined with the advantage of being a “late mover” in an industry, but, at the same time, a first mover with a “home field advantage” in a certain geography.
- Building local, European champions: In strategic important sectors such as individual mobility and transportation, we Europeans cannot leave it to other international players to dominate our own markets. We need to learn from previous experiences (e.g. Uber) and build our own local, champions that respect our regulation and work together with cities and municipalities.
- Regulation is your friend: If you are willing to and know how to comply, regulation can be your best friend. When TIER launched, it still had the opportunity to win and dominate the German market as well as other, important European markets, as micromobility vehicles and related services had yet to be regulated in these markets and therefore were not yet present.
- Always build the company you want to be in 6 to 12 months: It sounds cliché but, to me, the bold moves and impactful decisions that Lawrence and the team are making everyday, are the perfect example for always thinking ahead: Regardless of the constraints of the status quo, strive for greatness in everything you do and always build the company you want to be, not the company you are right now.
This incredible ride has , luckily, just begun and there is so much more to come. I’m extremely grateful that we as Speedinvest are part of this journey and I’m looking forward to many more interesting lessons learned along the way.
Ifyou want to make up your own mind and get first hand insights, join us for the Fall edition of The Marketplace Conference on November 19th in Berlin where Lawrence will join us on stage (as a loyal reader of this blog, “si_friends” gives you a little discount here). Meanwhile, I would like to thank the whole TIER Mobility-Team once again for sharing the ride with us and welcome all new investors on board: hold on tight, it’s going to be one hell of a ride! ;-)