With Uber just days away from going public, a small challenger has raised some funds of its own to take it and the rest of the field on in francophone markets. Heetch, a ride-sharing platform based out of Paris with operations across France and French-speaking Africa, has picked up a Series B of $38 million, at a valuation that we understand to be around $150 million.
Very small potatoes compared to the $90 billion value some have ascribed to its much larger competitor. But the list of Heetch’s investors — a combination of strategic and financial players — speaks to both the untapped opportunity that investors (and founders) think still exists in the wider market, and the fact that many believe that Uber doesn’t address everything and everyone, and there remains room for more companies to approach the need to transport people in different ways. (Indeed, others like Gett, which this week announced a $200 million round, also capitalising on these gaps.)
The round is being led by Cathay Innovation and Total Ventures (the investment arm of the oil and energy giant), with participation from existing shareholders Idinvest Partners, Innov’Allianz, Alven, Felix Capital, and Via-ID, and it brings the total raised to around $70 million (following from previous rounds of $12 million in 2017 and $20 million in 2018). The funding will be used to bring Heetch to more markets — today it is in France, Belgium, Morocco and the Ivory Coast, and the plan is to expand Algeria, Cameroon and Senegal later this year — as well as to continue hiring, particularly engineers in Paris.
It helps, too, that Heetch has had its share of interest from acquirers over the years, including — our sources tell us — an approach from one of the world’s biggest ridesharing platforms. (It was rebuffed on the low price offered.)
Heetch was started in 2013 by Teddy Pellerin and Jacob Matthieu to fill what it saw as a clear gap in the market in Paris: providing rides to 20-somethings back to the outskirts and suburbs of Paris after late nights out in clubs in town — a market that was not being served by other taxi companies, nor by public transport.
As Pellerin, who is now the CEO, describes it, Heetch took a casual approach to solving this casual passenger problem: the idea was to make the service truly peer-to-peer, by bringing on drivers that were the same age and just like the people that were being driven (they might have been coming home from the same clubs).
The idea caught on virally with its user base — would you expect anything less of a service aimed at millennials? But, alas, not with the regulators, who shut down the service for not using licensed drivers.
Ironically, it was just then that Heetch got approached to be acquired, and also was picking up its earliest funding from Felix.
“We took a different approach when we backed them,” said Antoine Nussenbaum, who led the deal for Felix. “We were making a strong statement: we believe that in service categories that feel commoditised, you can build a specific community and experience, and that has been more than proven to date with Heetch.”
In fallow mode, the company rebuilt itself with a refocus on working with professional drivers, but while also trying to keep some of the ethos that made it stand out from others like Uber and the other big player in the market in France, the Daimler-majority-owned Chauffeur Prive (which earlier this year rebranded to Kapten). By continuing to serve younger users; driving to parts of the wider metro area that others would not; by taking a smaller cut from the drivers in order to incentivise them to drive with Heetch over others; and by taking a “nice guy” approach to the business.
“We are more like Lyft,” Pellerin said. “We have a friendly service, with good interactions between riders and drivers. We are also better at servicing younger users because we are a bit cheaper.”
And it added a twist: it saw a chance to export its model to other francophone markets where public and private transportation infrastructure were not overly developed, and its app could be minimally adjusted to work. These days, Pellerin said that while Paris is still Heetch’s biggest market, its second-largest today is Casablanca in Morocco (and Brussels in Belgium is third).
Ironically for a company that got its start by clearly violating local regulations, one notable aspect of how Heetch is growing is that today it’s adjusting its model to tailor it to the regulatory and other requirements in each country, which might include working with professional drivers, or even painting cars a specific color in order to operate a livery service.
Interestingly, there is another way that the company is different from Uber (which racked up $1 billion in losses last quarter): it’s close to becoming profitable, Pellerin noted, in the four markets where it is active today.
“We are very proud to join forces with Heetch and its talented team. We are convinced of Heetch’s potential and believe in its development strategy in Europe and Africa, a region we monitor closely. Millions of Africans will be able to benefit from Heetch’s services. This investment fits perfectly with our investment thesis around mobility and complements our global portfolio in the space which includes Drivy-Getaround, Momenta, Glovo, and OnTruck,” said Jacky Abitbol, Partner at Cathay Innovation, in a statement.