Having been an investor, vocal cheerleader, and quite involved with Taxibeat from day one up until the company was sold, I am very happy with the outcome of this journey. The sale was a successful event for everyone involved: founders, employees, investors, and the buyer who bought an amazing complementary company.
However, when people hear exits, they typically focus on the happy end-game and assume that the startup journey was linear and straightforward. Especially in the case of Taxibeat, which became a love brand having tremendously upped the consumer experience of hailing a taxi, people assume that we must have had it easy. Hence, I wanted to discuss lessons learnt and note that the 6-year long journey of Taxibeat has been anything but a smooth ride.
Starting an international company in the Greek startup environment in 2011 was not an easy task. First, there was no relevant experience. There were not many cases of tech companies starting from Greece, scaling, and succeeding internationally. That meant that there were no experienced founders, employees, and investors who had been exposed to international scaling. Additionally, funding for startups in Greece at the time was almost nonexistent. There were no Venture Capital funds and there were very few angels with limited capacity to support ambitious founders. That (luckily) did not deter us at the time (ignorance) and we are now happy to discuss the lessons learnt the hard way so that future founders will have it easier.
Quick access to significant funding is key
Taxibeat in 2013, having achieved a clear product-market fit, wanted to raise a more substantial round (around 1 million euros) to scale in Greece and venture internationally. It turned out that it was very difficult to put together a round even though the company had strong growth momentum and enjoyed substantial and very positive brand awareness. Nikos, the founder, and I had to go around and have numerous discussions with people who had limited previous exposure in startups or for whom this private investment would have been their first. The result was that it took us 6 months and a significant distraction to raise a round from 15 different investors. At the same time, global competitors with similar products raised tens of millions and could expand geographically much more quickly.
Apart from the loss of focus, limited access to funding also meant that future funding from Series A VCs became very difficult because the well-funded competitor landscape became busy and that made a bet on Taxibeat less appealing.
The lesson learnt here is that a startup should consider the lack of access to easy and significant funding as a serious competitive disadvantage. For Greek startups, despite the launch of VentureFriends that has certainly improved the funding environment, access to funding and especially for Series A remains limited. Ambitious founders, after their seed rounds, should be prepared to spend time in European hubs like London to connect with Series A investors.
International expansion should be paced
When Taxibeat successfully raised a Series A round from Hummingbird it was a relief but on the other hand prompted us, based on our early success in Brazil, to quickly launch in 3 more international markets. In typical entrepreneurial excitement and optimism, we were a 3-year-old company out of Greece and had concurrently ventured out in Brazil, Mexico, Peru and France. All that, was done with a 3 million euro round that was raised from a Series A investor who did not have the capacity to follow on with 10–20 million if that was needed. Soon after our first success in Brazil, (we were doing more than 100,000 rides a month growing >15% month over month with significant revenues) 99taxi and Easytaxi launched, both having easily and quickly raised significant funding just for Brazil. They also zeroed commissions earned from taxi drivers, putting us tremendous pressure given that we relied on our revenues to support growth. After 9 months, and having tried to unsuccessfully raise more funding, we realized we could not compete in all those markets and decided to change route, focus on Peru, a promising market which was less competitive, and strive for profitability. That period was the most stressful in the history of Taxibeat. We had pulled out of Brazil, Mexico, and France and became a company with presence only in 2 distant geographies with revenues only from Greece. Peru was the last market we entered and being early we had not started monetizing yet. Finally, we had limited runway and we had to raise new funding with an unappealing story and on the back of a previous Series A valuation that was rich given our, at the time, optimistic plan for international expansion. That bridge round was very stressful to raise and was eventually filled after months of fundraising efforts with the support of Hummingbird and other angel investors who believed in the potential of the company.
The takeaway is that international expansion stretches an organization and cannot be undertaken for the first time in many geographies concurrently.
International expansion requires building a larger and stronger team as well as being able to sustain prolonged losses while waiting for the business to grow.
We rushed too quickly in many markets with distinct requirements and that put pressure in an already swamped and constrained team in Greece. Startups should take the time to grow their team, absorb lessons, formalize processes, create a playbook and then launch in one new geography. That way the team will test its capabilities in a new market and can absorb the learnings that will then be applied in more markets.
The founders venturing from a smaller ecosystem, need to additionally realize that their quest for international expansion will be even more difficult. Hence an increased sense of urgency, collaboration with other startups, and selective launch in less competitive markets is required.
International expansion should not be feared or delayed
On the other hand, even though we closed shop in 3 markets, we focused our resources in a market that was very far away and seemingly very different from Greece. One would never have expected a Greek company to become a strong player in Peru, but it did happen and that should provide confidence that a solid team can launch a product successfully in a distant geography.
Especially when the startup comes from a small market, international expansion should be done sooner than later to mitigate the single geography risk and amortize the significant (fixed) product development cost in a larger market. If Taxibeat had not ventured into Latin America (Peru is currently 75% of the total business and growing faster than Greece) we would have been a much smaller and loss-making company.
A great Product still needs marketing investment
Taxibeat is a company with an amazing product DNA. The founding team has an engineering background and marketing was not given the proper attention/investment in the beginning. Had it been for another product, that low focus in marketing could have been worrisome. In the case of Taxibeat the product had wouaoued customers, gained very strong virality and therefore we still experienced solid growth. However, had we focused on marketing earlier we could have grown sooner and more. Not all startups have the luck of exciting consumers and thus getting viral growth as Taxibeat did. Even if a product is amazing (and obviously having an amazing product is a prerequisite for success) and sells on its own, marketing should be used to amplify the effect and drive growth sooner. Higher growth, apart from a sexier fundraising story, also helps with runway by reduced monthly burn.
Concluding, Taxibeat is a huge success for an ecosystem that had few startup champions up to now. We should celebrate the success but we should also heed and spread the lessons so that we prepare future founders to achieve successful results more efficiently.
Working on easier access to funding, launching internationally soon but at a pace, and growing the team capabilities on all functions are some of the lessons learnt along the journey.
Best of success!
Supported by InnovFin Equity, with the financial backing of the European Union under Horizon 2020 Financial Instruments and the European Fund for Strategic Investments (EFSI) set up under the Investment Plan for Europe. The purpose of EFSI is to help support financing and implementing productive investments in the European Union and to ensure increased access to financing.
Attention! This investment falls outside AFM supervision. No licence and no prospectus required for this activity!