Gett on Wednesday said it had agreed to buy its fellow Israeli ride-sharing startup Juno for $200 million as the two battle the industry giant Uber in the key New York City market.
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Gett confirmed the deal, which was reported on Tuesday by TheMarker to be imminent, but said its terms hadn’t been finalized, most importantly, whether Gett would pay for Juno with cash, shares or a combination of the two. Juno’s four founders, including Talmon Marco, will remain in New York to lead the merged companies’ operations in the United States.
Juno publicly launched its ride-sharing app in New York about a year ago with a strategy of competing with Uber by offering drivers better terms. It takes only 10% of drivers’ revenue and offers them shares in the company. Juno aimed to provide better service to riders as well by cherry-picking the highest-rated drivers working for Uber and Lyft, another rival, “We built Juno around the belief that when people are treated better, they provide better service. Happy drivers, happy riders,” the firm says on its website.
However, Uber continues to dominate the New York market despite its widely publicized problems vis a vis customer service and company culture. Its market shares fell to 72% as of last autumn from 91% in 2015, but that still leaves it way ahead of the others. Lyft had just 12% at the end of last year while Juno has 7% and Gett, for which New York is not a major market, just 2%.
Via, a fifth company founded in 2012 also by Israeli entrepreneurs — Daniel Ramot and Oren Shoval — also had a 7% share.
Juno founder Marco — an Israeli entrepreneur who sold his previous app, the popular messaging app Viber for $900 million — raised $30 million, much of it his own money. However, he has had trouble raising any follow-up investment, which prompted him to hold talks with Gett.
Unlike in Israel, Russia and London where its app is used to hail ordinary taxis, in New York, Gett offers riders “black car” service, which are pre-ordered taxis popular with business users. A merger of Gett with Juno would boost Gett’s New York market share and provide Juno with a wider platform.
Gett is flush with cash: It raised $300 million from the German automaker Volkswagen 11 months ago and last November secured a $100 million, seven-year loan facility from Russia’s Sberbank, which is one of its big corporate customers. “This current deal provides a really enormous opportunity for expansion, so we’ll be looking for more capital this year,” Gett’s CEO and founder Dave Waiser has told TechCrunch in an interview on Wednesday.