The Estonian ridesharing company, Bolt, hard hit by the coronavirus crisis, has asked the Estonian government to step in to save the company.
Bolt is particularly hard hit by the current coronavirus crisis. What was previously the Europe’s third fastest growing company, has seen 85% of its turnover wiped off during the crisis. Until recently, Bolt was the only Estonia-based unicorn – a startup valued at over $1 billion. But the startup, founded in 2013, has never made a profit and relied on venture capital investments and a large European Investment Bank loan (€50 million) to take the company further.
Bolt’s founders, Markus and Martin Villig, have now sent a letter to the Estonian government, requesting a loan of €50 million – or a loan guarantee for the same amount – from the state for the company to survive.
“Taking into account the impact on Bolt’s turnover (a decrease of 85%) and the researchers’ models that the economic recovery will take place gradually and probably only by June-July, according to current forecast, our minimum financing need will be at least €15 million per month, €50 million in total,” the letter said, adding the amount is needed to cover fixed costs and rapid investments due to market changes to “ensure the company’s sustainability and ability to emerge from the crisis without fatal effects”.
The brothers said they cannot get a loan from commercial banks. “Neither the balance sheet size nor Bolt’s profit and loss ratio meets the bank’s usual standards for credit decisions. This analysis applies to most, if not all, of Estonia’s fast-growing companies. Therefore, the applicable criteria are not appropriate in the current situation.”
Bolt’s founders proposed two solutions in their letter: either the state-owned financial institution, KredEx, would loan directly €50 million to Bolt – or KredEx would guarantee a bank loan for 90-100 per cent of the same amount. However, both options would require amendments to the current Estonian legislation.
Kaimar Karu, Estonia’s minister for foreign trade and IT, said at the government’s press conference on 9 April that the cabinet will discuss “different options” and indicated that the government could acquire a stake in Bolt, as one of the options.
Martin Villig later told Estonian World that the loan from the EIB came in January and is allocated in three parts. “No bank has refused to give us a loan, but we just pointed at KredEx’s current loan methods and their incompatibility with startups.”
From a taxi app to a unicorn
Bolt was launched as Taxify by the Estonian startup entrepreneurs, Markus and Martin Villig, in 2013. Markus, then just a 19-year-old student, had been frustrated by the waiting time and expense of taxis in the Estonian capital, Tallinn – especially in the weekend nights when returning from a night out. He launched a mobile app that allows people to request a taxi or private driver from their smartphone and the app also shows the price and waiting time.
Bolt later also expanded into electric scooters and food delivery services and currently operates in over 30 countries and in more than 150 cities around the world. In 2019, Bolt became a unicorn – a startup with the valuation over USD1 billion, according to the New York City-based research firm, CB Insight.
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Cover: Markus Villig, a cofounder of Bolt (Bolt).