The EU is backing taxi app Bolt to help it compete with Uber

Key Points
  • The European Investment Bank has provided Estonia's Bolt with a $56 million venture loan.
  • The financing will be used by Bolt to invest in ride hailing and food delivery — key services also offered by Uber.
  • Competition between Bolt and Uber has heated up after the latter was blocked from operating in London.
Bolt CEO Markus Villig

Bolt, the European challenger to ride-hailing giant Uber, has secured 50 million euros ($56 million) in debt financing from the lending arm of the EU.

The European Investment Bank, or EIB, has invested in Bolt through a venture loan, which is used as an alternative to taking equity in a start-up to avoid diluting existing shareholders' ownership.

Tallinn, Estonia-based Bolt is one of several firms looking to chip away at Uber's dominance in the ride-hailing space. Founded in 2013, the firm was initially called Taxify but since changed its branding to offer more services like scooter sharing and food delivery. It currently has 30 million users in 150 cities across Europe and Africa.

The strategic financing from the EIB will help Bolt ramp up spending on research and development to make its services safer and more sustainable while also maintaining operational efficiency, Bolt and the EIB said in a joint statement Thursday.

That also means investing in Bolt's main line of business, ride hailing, as well as food delivery, which it added to its platform last year. Both services are key to the company's bid to take on Uber, its Silicon Valley competitor.

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The battle between the two has heated up recently after Uber was blocked from operating in London by local transport regulators. The firm is still operating in the U.K. capital however as it appeals the decision.

The specific type of funding the EIB is granting Bolt is what's known as a "quasi-equity" debt facility. According to the lender, the financial return of such loans is calculated as a percentage of a company's future revenue streams, preventing equity dilution.

EIB Vice President Alexander Stubb called Bolt a "good example of European excellence in tech and innovation," while Bolt CEO Markus Villig said the loan "enables us to move faster towards serving many more people in Europe."

Counted among a growing class of "unicorn" companies — private tech firms with a valuation of $1 billion or more — Bolt is also in talks with investors for a new round of funding that would cement its unicorn status. Though it's seeking more cash, Bolt's Villig insists the company is in good financial health. The firm says it's now profitable in two thirds of its global markets.