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ST PETERSBURG (Reuters) – Russia has overtaken France as the biggest market for French ride-sharing startup BlaBlaCar, a growth driven by long distances between Russian cities and a culture of giving lifts to strangers, the company’s co-founder and CEO told Reuters.
Nicolas Brusson said the unlisted company, which entered the Russian market four years ago, plans to invest 10 million euros in Russia next year, more than BlaBlaCar’s total investments over the past three to four years.
“We are talking about 15 million members in Russian which means that more than one Russian of ten is already signed in BlaBlaCar. We are speaking about over 3 million Russians that are transported by BlaBlaCar every month,” he said.
BlaBlaCar’s app works by matching passengers with drivers who have spare space in their vehicle and are heading to the same destination.
The company, founded in Paris in 2006, describes itself as the world’s largest carpooling community. It has two models of making money in Europe, taking a service fee from passengers for every journey or allowing the use of its app under subscription.
Brusson said the first reason for the firm’s success in Russia was cultural.
He said it had to work hard in Europe to persuade customers BlaBlaCar was a safe service. “In Russia people are more used to sharing and got the features of the service faster,” he said.
Before ride-sharing services like Uber came to Russia, it was normal for citizens to flag down a private car in the street, and share the ride, for a modest fee. The practice grew out of the fact that car ownership was not widespread, while taxis were heavily regulated and expensive.
Brusson said the second reason BlaBlaCar did well in Russia “is the size of the country, the shape of the country. It’s a kind of perfect for long distance cooperation because of big population, lots of big cities we can help connect.”
Russian economic growth is slowly recovering after two years of recession, but is also under pressure from U.S. sanctions imposed in April on Russian businessmen and big companies.
Brusson said those factors might play to BlaBlaCar’s strengths. “People are going to be more cost-conscious so people will choose services like ours because people can save money and drive cheaper,” he said.
BlaBlaCar is ramping up investment in the Russian market even though its operations in Russia, unlike in European Union markets, are not yet monetized, passengers in Russia pay for their journeys in cash directly to drivers not to the service.
Brusson saw Russia as a very strong financial contributor for BlaBlaCar in terms of four to five years.
“Next year we will invest as much as we’ve done in the last 3-4 years. Because the activity is just doubling year on year, and there is a real need we can help address, so it leads us to invest,” he said.
Reporting by Polina Nikolskaya; Editing by David Evans
PARIS (Reuters) – When Rob Spiro left San Francisco to settle in France with his wife and kid in 2016, the family chose a mid-sized city on France’s west coast over Paris’ burgeoning start-up scene.
At 32, the Yale-educated entrepreneur and former Google product manager had already co-founded two start-ups, including one sold to Google for $ 50 million in 2010.
In Nantes, France’s sixth largest city, known for its mediaeval castle and whimsical mechanical creatures, he sees the potential for a smaller version of America’s Silicon Valley, home to tech giants Apple, Facebook and Google.
Quality of life, not money, is the key, he says.
“What everybody in Nantes sees and experiences is that there are thousands of people who move here from Paris,” he said at his start-up accelerator, Imagination Machine.
“They’re looking for a better quality of life, but they want to remain in a city that is active and dynamic.”
His “incubator”, financially backed by the region’s biggest companies, opened its doors in June to support the launch of selected start-ups with seed funding and mentoring.
Nantes itself is part of the promotional picture. The city was ranked second after Bordeaux among cities where Parisian executives would wish to move, according to an August poll for recruiting website Cadremploi.fr.
“Here’s the strategy to become the next Silicon Valley: become a place where people, especially young people, want to live,” Spiro said.
With venture capital investments reaching new records in Europe, the competition to lure new tech companies goes beyond the three usual metropolises – London, Paris, Berlin – and now includes smaller cities that bet on their own mix of schools, research centers, investors and culture to lure hotshots.
Venture capital firms invested 8.7 billion euros ($ 10.3 billion) in European tech companies in the first half of 2017, up 21 percent from the year before, according to Dealroom. Such investments jumped 18 percent to 1.3 billion over the same period in France, putting it third after Britain and Germany.
The trend is now gaining further momentum, driven by high expectations for business-friendly policies under new President Emmanuel Macron and the uncertainties caused by the British vote to leave the European Union.
Nantes-based iAdvize has benefited from the boom. The company, which offers a marketing platform connecting customers to experts, closed a 32-million-euro fundraising in October.
It is one of the prime examples of Nantes’ success in the tech field, along with Akeneo, which makes software for retailers, and Lengow, which does the same for e-commerce sites.
French venture capital fund Alven has shares in all three.
Part of Spiro’s plan for boosting Nantes’ profile is inviting former U.S. colleagues to come and check it out. Julian Nachtigal, who worked as head of Spiro’s second start-up, signed up for the “French tech visa” available since January.
“I never imagined it would be so easy to get a four-year residential visa to the EU,” Nachtigal said, comparing Europe favorably to the U.S. approach under President Donald Trump.
“There’s a growing trend of people leaving Silicon Valley to live elsewhere,” he added, citing the high cost of living.
Within France, too, a similar trend can be seen. Gregoire Monconduit, co-founder of Atelier Rosemood, an online maker of personalized birth announcements and wedding invitations, chose to move to Nantes years ago from Paris.
“We hesitated between three cities: Lyon, Aix and Nantes,” he said. “We thought we’d be out of Paris for three years, it’s been six years already and it’s the best decision we made.”
A long road lies ahead, however, if Nantes is to catch up with Paris, where a 34,000-square-metre megacampus for start-ups, called Station F, opened in June.
The Parisian region drew three quarters of all venture capital investments in the first half of this year, according to accounting firm EY. The region that includes Nantes got less than 3 percent of the total.
Editing by Luke Baker and Gareth Jones
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