Daimler invests in Uber's European rival Taxify

LONDON -- Taxify is set to step up its fight against global rival Uber after raising $175 million in funding from a group led by Daimler.

Daimler's investment adds to the automaker's portfolio of European mobility-services and technology companies, which have almost 22 million customers already.

Taxify has grabbed business from Uber in Central and Eastern Europe and major African cities. It counts 10 million passengers and 500,000 drivers in the more than 25 countries where it operates.

Daimler is majority owner of MyTaxi, which is a major online taxi player in Germany, and a rival to Uber in Britain, Ireland and Spain. The automaker is also an investor in Uber rivals Chauffeur-privé of France, and Careem, which operates in cities across the Middle East.

Taxify secured $175 million in funding from a number of other companies including European venture capital fund Korelya Capital, TransferWise co-founder Taavet Hinrikus and a number of existing investors including Chinese ride-sharing service Didi Chuxing, according to the statement Wednesday.

A Daimler representative will join Taxify's board.

The funds will be used to develop its technology and improve operations in its home markets in Europe and Africa, the company said.

Taxify was started in Estonia in 2013 by CEO Markus Villig, who was then 19 years old. The number of rides that employed Taxify grew 10-fold last year, according to the founder.

"There is a huge opportunity here, and we are going after growth," Villig, who created the first version of the platform by borrowing college money from his parents, said in an interview. "As we continue to expand, we will need to raise more capital -- but we haven't decided whether that would be through an IPO or private fund raise."

Didi Chuxing in August agreed to invest in and collaborate with Taxify, which had raised about 2 million euros from venture capitalists.

Uber rivals -- including Taxify, MyTaxi, Lyft and Ola -- are stepping up the battle for ride-sharing dominance in Europe, with local startups raising funds and global adversaries starting to lobby local regulators as they seek to gain a toehold in the region. Much of the perceived opportunity stems from the companies' recent conflicts with regulators in the region. Both Uber and Taxify are appealing Transport for London's surprise decision in September to ban the apps on safety and regulatory concerns.

Taxify is in negotiations with regulators in the UK, and hopes to restart operations, which were shut down within a week of being launched in London, before the end of the year, Villig said.

Uber, which has faced a range of struggles in its businesses over the past two years, remains the world's largest player in the online taxi hailing market outside China. However, it has retreated from several regional markets, including southeast Asia in March, and has taken a backseat in Russia and several nearby countries after forming a joint venture with Russia's Yandex.

Reuters contributed to this report