Taxi-app provider Gett Inc. is struggling to raise new funds as Volkswagen AG, its most significant investor, leans toward backing its own ride-hailing division in the battleagainst Uber Technologies Inc.
The German carmaker — which has already invested $300 million in Gett — has decided not to commit to Gett’s latest funding round, people familiar with VW’s plans said, who asked not to be identified because the talks were private.
Earlier this year Tel Aviv-based Gett — which links passengers with local cabs — hired Wells Fargo & Co. and Credit Suisse Group AG to help raise around $700 million to fuel expansion, valuing the app between $2 billion and $3 billion. Gett is now targeting $500 million at a similar valuation, according to a company official close to the fundraising.
However, new investors are so far hesitant to back Gett before VW commits to the funding round. Gett has considered splitting the round into two phases, with the second part set to close in December, allowing investors who have passed on the earlier stage to opt back in, according to two people familiar with the plans. VW may still decide to invest at a later date, the people said.
Spokespeople for VW and Gett declined to comment.
Gett operates in around 100 cities, including New York, London and Moscow. Other investors include billionaire Len Blavatnik’s Access Industries Inc. and Swedish fund manager Vostok Nafta Investment Ltd.
VW’s hesitance to back Gett comes as Uber — one of Gett’s main rivals — is suffering a series of setbacks in Europe. Uber is currently appealing a London regulator’s decision to revoke the car service’s license as it seeks more settlement talks, and has pulled services from Denmark and Norway after running into regulatory issues.
Gett has also been expanding into Uber’s home turf, in April paying $200 million to acquire Juno, a New York startup that endeared itself to drivers by offering company stock and better pay than Uber.
VW is throwing significant financial muscle behind its effort to catch up with more nimble rivals in the digital space after its previous management largely focused on traditional car manufacturing.
Last year, the world’s largest automaker launched Moia, which will offer ride-sharing and other mobility services. The new company, which cooperates with Gett, aims to be one of the world’s three biggest mobility providers and to generate revenue of “a couple of billion” of euros in a few years, Ole Harms, head of the unit, said at the launch.
“E-mobility, digitalization, mobility services and autonomous driving – now we finally address the big future topics with the necessary power,” VW Chief Executive Officer Matthias Mueller told 400 of his top managers at an internal conference last week.