Bolt raises $709m and is now valued at $8.4b

Bolt, Europe’s first mega ride-hailing start-up firm, said on Tuesday, January 11th, 2022, that it had raised $628 million in a new investment round led by Sequoia Capital and Fidelity.

The investment, which was endorsed by Whale Rock, Owl Rock, and some of Bolt’s current investors have increased the company’s valuation to 7.4 billion euros ($8.4 billion), up from over $4.8 billion just five months earlier.

Bolt says it would utilize the capital to massively expand to new regions and bring more consumers and partners to its “super app,” as well as to expand its innovative business lines, such as its 15-minute grocery delivery service Bolt Market, by opening “dark stores” in more locations.

“All of our business units are increasing,” stated Markus Villig, Bolt’s founder and CEO, during a media briefing. Even its most mature business, ride-hailing, is “seeing double-digit growth,” according to Villig, while the newer businesses, which are smaller, are growing even faster. Bolt is also working with more local governments to expand its services as part of their updated transportation goals, according to him.

In key markets such as London and Paris, the company, which was launched in 2013, has become a tough competitor to Uber, posing a challenge to the US ride-hailing company. Bolt has since expanded into a variety of other businesses, including online food and grocery delivery, as well as e-scooters.

Investors are starting to recognize the significance of the “super app,” an idea that combines many services onto a single platform, according to Villig. The style is particularly popular in areas of Asia, although Europe and North America have been slower to catch on. Bolt claims to have 100 million customers across 45 European and African countries. Villig, said his company is focused on improving — giving drivers greater commissions and providing discounts to passengers.

The growth Bolt is experiencing is also notable in light of the challenges that some of its competitors have faced in the aftermath of the Covid 19 pandemic: first, the pandemic had a significant chilling effect on people’s willingness to travel in a vehicle where they must share a closed-in space with another person. That problem was subsequently exacerbated when the business started up again, but so quickly that many firms are experiencing driver scarcity rather than a passenger deficit.

When the lockdowns first began, Villig revealed that Bolt, too, saw some “short-term variations” in demand. However, it has made hiring and retaining drivers a priority by offering more commissions than its competitors (typically, Villig said, it will pay between 10% and 20% better than competitors).

“Because there is such a scarcity of supply on these platforms, we’ve focused on offering the lowest possible commission to our partners.” “This has paid off handsomely for Bolt, as monthly revenues have more than doubled compared to pre-Covid sales,” Villig added.

Bolt frequently advertises its operational model as being leaner and more cost-effective than Uber’s. According to the company’s most recent financial report, the company lost 44.9 million euros in 2020, down from 85.5 million euros the previous year. Revenues increased by nearly 75% to 221.4 million euros. Uber recorded its first adjusted EBITDA profit (profits before interest, taxes, depreciation, and amortization) in the third quarter of 2021, despite long-standing doubts about the company’s ability to turn a profit.

Nonetheless, Bolt confronts many of the same regulatory risks that Uber has faced over the years, ranging from a historic U.K. court finding last year that Uber’s drivers should be considered as workers to forthcoming European laws that threaten to upend the economic model of gig economy platforms.

In the future years, Villig sees on-demand grocery as a key emphasis for the organization. With an inflow of start-ups ranging from Getir to Gorillas attempting to entice customers away from convenience stores and supermarkets with the promise of super fast delivery times, the sector has become extremely congested. Last year, Bolt introduced Bolt Market, a 15-minute grocery delivery service in Estonia. The company, like competitors, relies on “dark grocery stores,” which solely complete online orders and do not serve clients in-store.

It’s currently available in ten countries, with dozens of dark businesses already up and running. According to Villig, the company is gaining popularity in Central and Eastern Europe, and it aims to build hundreds of new locations this year.

Bolt’s CEO predicted that the company would spend “hundreds of millions” on expanding its grocery business over time. He questioned the long-term viability of supermarket delivery services, pointing out that the industry relies on razor-thin profit margins.

“This isn’t a software company,” Villig explained. “Operationally, this is going to be a very competitive business.” In a few years, the majority of these corporations that anticipate this to be a huge profit generator will be very disappointed.”