Kima-backed startup Heetch in limbo following court verdict

Greg Gille
03 March 2017

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Heetch, a popular French ride-sharing startup backed by Kima Ventures, has suspended its app after the company and its founders were convicted in court of enabling users to illegally operate taxi cabs.

Following a trial in December 2016, a Paris tribunal found Heetch and its founders, Teddy Pellerin and Mathieu Jacob, guilty of being accessory to the illegal operation of taxis on 2 March 2017.

Heetch and its founders were fined a total of €440,000. The prosecution had also called for Pellerin and Jacob to be banned from running a business for two years, although the court ultimately didn't follow suit.

According to local media, Pellerin and Jacob stated the Heetch service would be suspended while they review their options, including a potential appeal.

Established in 2013, Heetch is a French ride-sharing app specifically targeted at late-night rides, through which users can use their own car to transport other users. The app then suggests a recommended monetary contribution to the trip that passengers can pay to the driver. The company is headquartered in Paris and also operates in Lyon and Lille.

French VC Kima Ventures provided a round of early-stage funding to Heetch back in 2015.

The app quickly drew the ire of professional taxi drivers, 1,463 of whom acted as plaintiffs in the trial. They, and the prosecution in the trial, argued that Heetch could not be considered a ride-sharing app since users dictated the destination to drivers and not the other way around.

In France, ride-sharing is legal as long as drivers solicit passengers and do not charge a fare but merely suggest a contribution to vehicle maintenance and fuel costs. Blablacar, a popular ride-sharing app, has for instance managed to remain within the boundaries of the French legislation and attracted significant amounts of funding in recent years, including a $200m series-D round from Insight Venture Partners and other backers in 2015.

US giant Uber, on the other hand, was fined and had to withdraw its car-sharing scheme Uberpop in France in 2015, as it was also considered complicit of illegal taxi operation.

Heetch and its founders argued the startup was not enabling users to act as unlicensed taxis since contributions to vehicle maintenance (which the court ultimately considered to be fares) were only suggested to passengers and not mandatory, and that revenues were capped at €6,000 per driver per year.