VC backers fuel DACH's tech-driven transport boom

Regulatory challenges have prevented Uber from expanding in the DACH region at the rate it has in the US and London. However, there is evidence that leading German corporations are beginning to buy into the US giant's vision for the future of transportation. In January, Uber announced a partnership with Daimler, with the long-term goal of operating self-driving cars on its ridesharing network. Then in April, it was reported that German media conglomerate Axel Springer had taken a minority stake in Uber, although Springer emphasised that this represented a financial rather than a strategic investment.

In the DACH region, Uber is currently operating in Berlin, Munich, Vienna, Basel, Geneva, Zurich and Luzern. Although it has no immediate plans to expand geographically, it does hope to expand the services offered.

Friend or foe?
Expansion of any kind will necessarily run into competition from transport, delivery and other flexi-job startups in the region. These companies are often backed by venture capital or other strategic investors and can have a competitive edge based on specific regional and cultural factors.

A prominent example of this is CarJump. The car-sharing app was backed in its early stages by VC firms High-Tech Gründerfonds and UnternehmerTUM. These investments were rewarded when the company was sold to PSA Group in December 2016, which rebranded the company as Free2Move with the intention of creating a worldwide transport facilitator. Car sharing is a popular alternative to Uber in Germany, and this platform must surely be seen as a competitor.

Another German transport startup that could demonstrate an alternative approach is Lilium. Originally based in Munich and backed by European VC Atomico Ventures, the company made international headlines when it launched its first autonomous test flight in late April. The short range air travel market is one in which Uber is keen to be a pioneer. Shortly after Lilium's maiden voyage, Uber announced a series of partnerships with Dallas- and Dubai-based real estate companies, aircraft manufacturers and electric vehicles manufacturers. The goal is to launch a pilot urban aviation system by 2020.

Symbiotic service
This approach of partnering with local entrepreneurs is one that could become prevalent in the DACH region. An Uber spokesperson explained how many of these transport companies, as well as public transport networks, are complementary providers rather than competitors: "For the last mile of your journey you sometimes still need to use an Uber, because it's late, because you're tired or you have baggage."

This argument was supported by statistics released by Uber after London's launch of the night tube. Rather than the expected drop in late night ride requests, Uber reported an increase of 22% in journeys starting near night tube stations. People used the service for the last mile of their journey, enhancing the attractiveness and affordability of both transport methods.

Uber's expansion in the DACH region will run into competition from transport, delivery and other flexi-job startups in the region. These companies are often backed by venture capital or other strategic investors and can have a competitive edge based on specific regional and cultural factors

But it is not just about convenience and speed, or even safety, according to Magnus Schmidt, co-founder of Munich-based Scoo Mobility. After becoming frustrated with his commute he decided to set up a company that put the fun back into commuting, a digital platform for scooter sharing. Scoo has attracted investment from Bavarian VC Bayerische Beteiligungsgesellschaft and now has a fleet of around 250 scooters in Cologne and Munich. When asked about potential exit strategies, he was dismissive of the options of partnering with either Uber or other transport platforms. "The only exit that makes sense is to a manufacturer, those are the people to whom we have the most impact".

The situation is somewhat different for a company like Bestmile, backed by VC Partech Ventures, which invests in transport startups in DACH as part of its pan-European strategy. Bestmile is a Swiss autonomous vehicle software developer, which held a CHF 2m financing round in April led by Partech. "Bestmile enables fleet management independently of the OEM" said Otto Birnbaum. This means the company is open to partnering with or eventually exiting to a variety of different players including, but not limited to, automobile manufacturers, auto-parts manufacturers, tech giants and public institutions.

Prior to the announcement of their companies' collaboration, Uber's Travis Kalanick had a "fireside chat" with Daimler CEO Dieter Zetsche on the future of transportation. Zetsche was clear that there would be casualities in the mobile transport sector, as new technologies "always destroy something but at the same time create magnificent new opportunities". The friend-or-foe distinction did not exist for him, as he told Kalanick and the audience. "We can cooperate in some fields, but at the same time be competitors."

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