Germany’s Blacklane Gains Traction in the U.S.

expanding into more cities, after overcoming obstacles in heavily regulated European markets that have hindered some of its main competitors.

The Berlin-based start-up is broadening its U.S. presence to 71 from 41 cities, the fastest expansion in its three-year history, it said. It also added six Canadian cities to its market share.

The expansion gives Blacklane an opportunity to tap into a well established market for limousine pick-ups.

“The U.S. is far ahead with regard to convenience—this has always been the case,” said Peter Lennartz, head of Ernst & Young’s StartUp Initiative Berlin. Mr. Lennartz said the acceptance of such limousine services is higher in the U.S., but competition is also tougher.

Blacklane offers established limousine providers a way of earning extra money, since it uses their free capacity to connect with passengers through an app or its website. Drivers generally take the ride at a lower price to the one Blacklane takes from customers.

Three years ago, Blacklane was doing only doing business in Germany, where it faced the same obstacles as its U.S. competitor UberBlack: a heavily regulated taxi market requiring drivers to adhere to set fare structures and regulation.

Unlike Uber, however, Blacklane decided not to challenge these rules, but rather make them an element of its business model. Its starting point was German law, which requires limousines to return to a base location after each ride to prevent competition for people hailing taxis on streets.

With Blacklane, travellers schedule trips on the company’s website or app one hour to months in advance. By scheduling rides, drivers legally fill unused capacity without having to return to their base empty.

In this way, “the company has found a loophole,” said Mr. Lennartz.

Blacklane Chief Executive Jens Wohltorf said the obstacle has turned into an advantage.

“After starting in a market where regulation is highest in the world, we haven’t had any legal disputes so far in any of the 50 countries (where we operate),” Mr. Wohltorf said.

The company is now present in over 180 cities. Mr. Wohltorf said he would like to add another zero to this number.

Blacklane’s investors include Daimler AG. Its most recent valuation stood at 60 million euros ($64.1 million).

Mr. Lennartz of Ernst & Young called that “a good average,” though it is way below Uber’s a little over $40 billion valuation.