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Europe's ride-sharing unicorns call for reform to help the sector thrive

Key Points
  • BlaBlaCar and Bolt's co-founders say the lack of a common framework on ride-sharing makes it more difficult to operate across Europe.
  • Both start-ups are calling for a common EU approach when it comes to new segments within the transportation industry.
  • Ride-sharing has gained a lot of traction from investors, with stock market debuts from U.S. giants Uber and Lyft making headlines of late.
Martin Villig, co-founder of ride-hailing firm Bolt, which was formerly known as Taxify.
Bolt

PARIS — Ride-sharing giants in Europe have urged reforms for the transport industry, in the hope that it will help them expand further within the continent and face less barriers to innovation.

Co-founders from two of the region's largest mobility firms, BlaBlaCar and Bolt — formerly Taxify — said the lack of a common framework on carpooling and ride-hailing makes it more difficult to operate across the European Union.

The main issue is that the EU, though a collective bloc of 28 — or soon to be 27 — nations, does not have a unified "definition" of what it means to be a ride-sharing start-up, and therefore this creates a fragmentation among the different member states.

"I think it would help even in our industry if there would be some kind of harmonization of the transport regulations," Bolt co-founder Martin Villig told CNBC in an interview at the Viva Technology conference in Paris.

The firm has been barred from entering countries like Germany, Italy, Spain and Denmark, Villig said, because those territories do not yet permit transportation start-ups to operate freely. In Spain, for instance, firms like Uber and Spanish company Cabify have faced a local pushback due to discontent in the traditional taxi industry.

"I think that there is a big opportunity to open that market," Bolt's co-founder said of untapped markets like Germany and Spain, adding that "giving some general harmonization guidelines from a European level" would help, "and then maybe some smaller details can be handled."

Growing a start-up in the U.S. is like running a 100-meter race. Growing a start-up in Europe is like running a 110-meter hurdle race.
Frederic Mazzella
co-founder and president of BlaBlaCar

BlaBlaCar co-founder and President Frederic Mazzella sympathized with Villig's concerns.

"We face the same thing," he told CNBC. "We are missing today the European definitions of new businesses that could be applied in all countries."

BlaBlaCar co-founder and President Frederic Mazzella.
BlaBlaCar

Such a lack of definition means that start-ups are having to "explain and reexplain again" their business models to each individual EU state to expand across Europe, Mazzella said.

"Growing a start-up in the U.S. is like running a 100-meter race," he said. "Growing a start-up in Europe is like running a 110-meter hurdle race." Europe currently adds 28 hurdles in terms of regulation, he said, albeit noting the caveat of Britain's departure from the bloc, which would mean 27 hurdles.

Part of the DNA of start-up companies is to share the value with the employees who work hard.
Martin Villig
co-founder of Bolt

Founders like Villig and Mazzella have also in recent months decried the lack of clear-cut rules on stock options across Europe. In an open letter to politicians in November, various start-up founders and executives called for reform around employee stock ownership to help European companies attract more talent and better compete against their gargantuan U.S. rivals.

"In some markets it's very complicated and you need special lawyers," Bolt's Villig said, adding that Estonia — where Bolt is based — is more forward-thinking in this regard. "Part of the DNA of start-up companies is to share the value with the employees who work hard."

Employee stock options grant staff the ability to buy a specified number of shares of the company they work for at a certain price and at an agreed time.

BlaBlaCar's Mazzella added that his firm is pushing for Europe-wide visas that allow people to work for start-ups throughout the continent, as tech firms tend to seek global audiences. He highlighted a French start-up visa program that lets founders, employees and investors seek residence in the country.

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The ride-sharing market has gained a lot of traction from investors, with stock market debuts from U.S. giants Uber and Lyft making headlines of late. But both of those initial public offerings proved disappointing, with Uber and Lyft's share prices dropping below their IPO pricing on fears around their lack of profitability.

That could prove to be a kind of litmus test for their competitors, as speculation grows over the next big ride-sharing IPO. China's Didi-Chuxing for example has been rumored to be in the process of seeking a flotation. For their part, Bolt and BlaBlaCar's founders said it was too soon to talk of a float on the public markets.

Both Bolt and BlaBlaCar are widely considered as success stories within Europe, having crossed so-called "unicorn" status — unicorn companies being private tech firms that are valued at more than $1 billion.

Europe has very much been viewed as the laggard when it comes to advancing in tech, with the U.S. and China producing huge companies in the sector. But the continent is showing more promise — a record $23 billion in venture capital money was estimated to have flowed into European start-ups in 2018, according to Atomico.