The on-demand transportation service continues to heat up, and today the spotlight is shining on a New York startup whose business is based primarily in Europe. Gett, a cab-hailing startup with operations across some 60 cities, is getting a $300 million investment from German car giant Volkswagen. VW plans to use the investment to spearhead its own move into ride-sharing, on-demand transportation and autonomous cars.
We still don’t have a valuation for Gett in the wake of the deal but we are trying to find out. In November, Haaretz, a publication out of Israel — Gett has operations and an R&D center in the country — reported that Gett was looking for debt funding at a $2 billion valuation, having previously been valued at $575 million. We have confirmed with Gett’s co-founder and CEO Shahar Waiser that VW is the sole investor in this round.
Gett has now raised $520 million in funding — other investors include Access Industries and Kreos Capital — and it says it is profitable in several cities, with annual revenues of $500 million.
VW is Europe’s largest car maker, with other brands under its ownership including Porsche, Audi, Lamborghini and many more. And while $300 million is no small sum of money and is a huge win for Gett, $300 million is a relatively small sum for VW, which reported revenues of $238 billion (€213 billion) in 2015.
But VW also posted a loss of $1.8 billion (€-1.582 billion) in that same period, in the wake of an emissions cheating scandal that affected 11 million vehicles, which came just on the heels of a previous scandal involving the company suppressing news about a security flaw in some of its vehicles. In that regard, VW investing in the next generation of transportation is one way for VW to point to the future and put some of that bad news behind it.
“Alongside our pioneering role in the automotive business, we aim to become one of the world’s leading mobility providers by 2025,” says Matthias Müller, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, in a statement. “Within the framework of our future Strategy 2025, the partnership with Gett marks the first milestone for the Volkswagen Group on the road to providing integrated mobility solutions that spotlight our customers and their mobility needs.”
This is VW’s first investment into one of the fleet of startups that are building up the on-demand transportation market, but it’s not the first to work with them. Perhaps most notably, GM earlier this year put $500 million into another Uber competitor, Lyft, to build up its own business in this area, spearheaded by its launch of Maven and subsequent purchase of Cruise, the self-driving car startup. Further back, some car makers have tried to acquire their way into the market, such as when Daimler acquired RideScout in 2014.
Gett CEO Waiser, who co-founded the company with Roi More, tells us there are many reasons why the partnership makes sense: “The first is that we share the same footprint. The world’s largest car producer are the strongest in Europe, with a 25% market share across their brands. And Gett is strong in Europe too, available in 60 cities and this footprint is a good match to start.”
The third is in the technology Gett has been building around big data and predictive algorithms, heat maps for demand and more. “When you look at what we are doing today you can recognise that this tech will be necessary when you go with autonomous cars,” he added.
Earlier this year, Gett launched a £6 flat-rate courier service in London to expand beyond taxi services, and it also consolidated some of its position by acquiring Radio Taxis, a rival firm.