GoCatch clung to big VC’s backing as proof of success, Uber argues

Lawyers for US rideshare giant Uber claim now defunct GoCatch is relying heavily on the fact that Square Peg backed the business as proof its business performed well.

Uber is being sued by Taxi Apps (GoCatch) which alleges serious misconduct that includes corporate espionage, hacking of competitor systems and knowingly launching UberX illegally in Australia without regulatory approval. Picture: NCA NewsWire / Jenny Evans

When one of the nation’s most prominent venture capital firms takes a “close look” at your start-up and decides not to invest, that is a sign that business is not going well.

At least, that was the view presented in a Melbourne court on Thursday as lawyers for US rideshare giant Uber attempted to demonstrate that its once biggest rival, GoCatch, would have failed regardless.

Taxi Apps (GoCatch) is suing Uber, alleging serious misconduct that includes corporate espionage, hacking of competitor systems and knowingly launching UberX illegally in Australia without regulatory ­approval.

Australian venture capital firms are being pulled into Uber’s defending argument, with firms AirTree and Square Peg brought up several times on day three of the trial in the Supreme Court of Victoria.

John Sheahan KC, on behalf of Uber, has attempted to show judge Lisa Nichols that GoCatch failed to convince investors to further fund the company before Uber had made a significant impact in Australia.

Unlike AirTree, Square Peg did invest in the start-up. It was involved in a $4.5m raise that valued GoCatch at $19m in ­October 2014. But the firm’s enthusiasm for GoCatch didn’t last. In one email read before the court, Square Peg partner Dan Krasnostein told co-founder Paul Bassat in 2016 that the GoCatch ship hadn’t sailed but “burned”.

“I think the ship has sailed or burned or something. Importantly, they had a market for the taking with relatively benign competitive dynamic for a few years,” the email read.

John Sheahan KC

Mr Krasnostein went on to say that GoCatch’s competitors at the time, including taxi-booking app InGoGo and Uber, were not doing that well locally and that the issue was not the concept, which he said was performing strongly in international markets. “It’s not the product, it’s the execution. Neil and Andrew were never really up to it, it seems,” Mr Krasnostein wrote of GoCatch’s founders.

Uber has for the past one and a half days attempted to quash GoCatch’s initial arguments, which are that the company ultimately failed after Uber illegally launched its rideshare business well ahead of its own version and that the company used a number of illegal tactics to hack its systems and poach its drivers.

Mr Sheahan on Thursday claimed GoCatch had relied heavily on the fact that it received initial investment from prominent venture capital firm Square Peg to argue that its business was sound.

“The fact that it was an investor is something that the plaintiff is relying on in support of the idea that it was a good business with good prospects,” Mr Sheahan said.

Uber has also attempted to show that even Mr Bassat could appreciate Uber’s concept of instant payments, quoting him having said: “I love the fact that I can just walk out of the car without having to worry about casual cards.”

“The point that Mr Bassat is making here is not about money, it’s about the user experience. It’s much better. It’s a much better user experience to just get in the car and get taken to where you want to go and get out of the other end and not have to negotiate with the driver about whether you pay cash or have the driver telling you that the app’s not working,” he said.

Originally published as GoCatch clung to big VC’s backing as proof of success, Uber argues