On-demand ride service Gett has announced that it has received a $100 million loan facility from Sberbank CIB, the corporate and investment banking branch of Russian national savings Sberbank.
This funding comes on top of $540 million previously raised by the company since 2010, according to Sberbank CIB. The last round of financing took place in May 2016, with Volkswagen Group investing $300 million in Gett.
“This loan agreement will strengthen the long-standing partnership [between Sberbank and Gett]. Both companies have a similar vision – to change peoples’ lives through technology and innovation,” stated Gett’s founder and CEO. “This loan agreement will further strengthen our partnership, support Gett’s rapid growth, and help us achieve our ambitious goals.”
Sberbank, which is among Gett’s largest corporate clients in Russia, also has a strong relationship with Uber. In September 2015, Sberbank and Uber announced a partnership “to explore the co-development of financial technologies with global potential.” In particular, Uber showed interest in Sberbank’s mobile payment technologies and online banking systems for entrepreneurs. In turn, Sberbank considered providing the growing network of Uber partner-drivers in Russia with different vehicle financing opportunities.
“With this transaction, we are announcing that our Merchant Banking & Advisory Department is open for business with rapidly growing tech companies. These may not yet have access to traditional bank financing, while venture loans can be an attractive solution,” added Oscar Ratsin, Vice President, Head of Sberbank Merchant Banking & Advisory, in a reference to the fact that venture lending has been a virtually unknown practice in Russia so far.
In addition, SBT Venture Capital, Sberbank’s venture arm, took part in Uber’s latest equity funding round.
A battlefield for global and local giants
Both Gett and Uber – as well as French car sharing giant Blablacar – consider Russia as a key market in their respective global expansion strategies. The Russian market for taxi services amounts to some $3-4 billion, according to Gett’s EMEA VP Maxim Krasnykh, or as much as $7 billion, according to the Russian government’s Analytical Center.
Aiming to control 50 percent of this market, Gett recently announced a $100 million investment plan until the end of 2017 to cover new cities and develop new types of delivery services beyond its core taxi service business. Thus last week the company made its service available in 29 new Russian cities, bringing its total coverage to 69 cities across the country. As reported by business daily Vedomosti, the newly covered cities include mid-sized agglomerations such as Kursk, Irkutsk and Khabarovsk as well as popular resorts like Minvody and Kislovodsk.
Uber’s presence in Russia has been more modest so far. The U.S. company arrived in the country in 2013, but began developing there actively only in 2015. While visiting Moscow in December 2015, its Vice President Ryan Graves underlined the importance of Russia in Uber’s strategy. He announced plans to expand to 10 new cities by the end of 2016, bringing total coverage to some 17 cities.
Yandex.Taxi, the taxi booking service of the Russian search giant, is a strong competitor, covering 40 cities in Russia and actively developing in neighboring countries. Smaller players are also in the running. Takeit, a taxi service launched in July last year, has received $2 million from Russian business angels.
Traditional taxi booking services should be mentioned too. Maxim, a leading player, operates in 137 Russian cities, according to Vedomosti.