German micromobility company Tier will lay off 22% of its workforce as it seeks to become profitable in a tough economic market, cofounder and CEO Lawrence Leuschner has announced.
2023 has been a tough year for micromobility startups, with VC capital hard to come by and many companies going out of business. For example, Dutch e-bike maker VanMoof declared bankruptcy in the Netherlands and the UK in the summer of this year and was later acquired by British technology company McLaren Applied, Swedish electric truck maker Volta Trucks filed for bankruptcy last month and Berlin-based e-scooter startup unu declared bankruptcy this week.
Tier has not been left unscathed either. In May this year, the struggling scooter company raised a convertible note from existing investors to tide it over while it looked for a buyer, but acquisition talks with competitors Bolt and Lime reportedly fell through.
Tier says that it does not comment on rumours and speculation in the marketplace, but that it has had conversations about potential consolidation opportunities on a “regular basis” over the last few years.
“It is a difficult day at the end of a difficult year. Everyone has worked incredibly hard to get us much closer to profitability, but the external factors have just limited what we could achieve,” said Leuschner in a post on LinkedIn published Tuesday.
“The people leaving us today are extremely passionate, driven individuals who will be an asset to any company. The decision we have made today has nothing to do with their performance and should not detract from how much they gave to this company.”
He said that the job cuts would be to the company’s “Central and Regional workforce, with the majority of affected roles sitting centrally.”
The micromobility startup has already seen many people leave the company in 2023. The company’s cofounder and CTO Matthias Laug left the company in February, for what Tier says were “personal reasons”.
According to LinkedIn, the company has seen an 18% decline in staff over the last 12 months. People in senior roles such as its head of engineering, VP of engineering, head of industrial engineering, VP of finance, chief people officer, SVP corporate strategy and development and VP product and growth have left the company in the last six months.
In early November, Tier told Sifted “that a small number of individuals in leadership positions have decided to pursue opportunities outside of TIER, which is quite normal after several years in a scale-up company like TIER Mobility.”
Tier’s CEO said on LinkedIn that the company has made drastic changes to its business model this year to put it on the path to profitability. The company has improved its EBITDA (operational profit before tax and other costs) from -63% in 2022 to be on track for -15% in 2023 and has achieved profitability for the last five months, he said.
For 2023, it expects to be profitable on an annual basis for 80% of its markets, including major markets like Germany, the UK and France.
“To achieve profitability on an annual basis, we recognise that we still need to make adjustments to our business and efficiency. Part of this was divesting our operations in North America via the sale of Spin in order to focus on Europe, and part of this is reexamining our set-up in Europe to make it more efficient. Unfortunately, this means that we are making a number of redundancies,” a Tier spokesperson said.
They added that, as of today, 140 employees are affected across central and regional roles but there will likely be more employees affected further down the line.
This article has been changed to reflect new information Sifted received from Tier
