Japanese conglomerate SoftBank has led a $250m investment in German micro-mobility firm Tier in a Series C funding round.

It is SoftBank’s first investment in the fast-growing e-scooter market, in which dozens of startups offer vehicles on a pay-per-use model which can be unlocked via an app.

The low-margin business has meant many operators have struggled to become profitable, instead relying on venture capital funding to pursue growth. However, Berlin-based Tier claims that it has been profitable since the summer, excluding interest and tax.

Tier, which operates 60,000 e-scooters in more than 80 cities in 10 countries, said it would use the funding to grow its presence in Europe and expand into new markets.

Existing investors Mubadala Capital, Northzone, Goodwater Capital, White Star Capital, Novator and RTP Global also participated in the round.

Tier has developed a charging network in which riders are offered free journeys to replace a removable battery stored at shops and other locations spread around a city. Other e-scooter firms instead send round vans to collect the vehicles for recharging, which eats into profits.

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By GlobalData

The startup said it will use the SoftBank funding to “fast track” the roll-out of thousands of charging stations in cities around Europe.

“After achieving profitability with our e-scooters, we have in place the foundations to lead the way towards seamless and sustainable mobility,” said Lawrence Leuschner, CEO and co-founder of Tier.

“Our vision is a completely new way of how we will move in cities in the future: all-electric, shared and affordable, and with different vehicles powered by one energy network. Together with, city and national government, we will build the best solutions to ensure safe, highly efficient, and sustainable movement from A to B.”

The latest funding round gives Tier a valuation just below $1bn, sources told the FT. This would make it the second-most valuable e-scooter startup after Bird, one of the earliest players to enter the market.

E-scooters are often touted as a greener mode of transport that can reduce congestion in cities. This is one of the driving factors behind the UK’s ongoing e-scooter trial, in which Tier is one of handful of companies that has successfully launched in select locations.

SoftBank, armed with its $100bn Vision Fund, has pumped billions into technology companies including WeWork, Uber, Slack and ByteDance. Some investments have been more successful than others, with co-working space company WeWork seeing its valuation plummet from $47bn in 2019 to $2.9bn in May this year. SoftBank’s investment in Tier comes from its Vision Fund 2.

Yanni Pipilis, managing partner at SoftBank Investment Advisers, said: “Micro-mobility fills a large gap left by traditional urban car usage and presents a viable alternative to legacy transit systems.

“Tier has a proven track record in establishing long-standing partnerships with cities and regulators, combined with a technology-led approach to develop leading customer propositions. We are pleased to support Lawrence and his team in building on this success.”

Read more: Tier to add sound to e-scooters to alert visually impaired