Local governments are forcing the scooter industry to grow up fast

Published August 15, 2019

Gone are the days when tech companies can deploy their services in cities without any regard for rules and regulations. Before the rise of electric scooters, cities had already become hip to tech’s status quo (thanks to the likes of Uber and Lyft) and were ready to regulate. We explored some of this in “The uncertain future of shared scooters,” but since then, new challenges have emerged for scooter startups.

And for scooter startups, city regulations can make or break their businesses across nearly every aspect of operations, especially two major ones: ridership growth and ability to attract investor dollars. From issuing permits to determining how many scooters any one company can operate at any one time to enforcing low-income plans and impacting product roadmaps, the ball is really in the city’s court.

Sources: Bird is in talks to acquire scooter startup Scoot

Published June 5, 2019

If you are among those who thought that the scooter market sounded a little overhyped and overcrowded, we’ve gotten wind of a deal that could point to some impending consolidation. The on-demand scooter business Bird has agreed to acquire Scoot, a smaller two-wheeled mobility startup, sources tell TechCrunch.

The stage of the negotiations is not clear although from what our sources tell us, it sounds like the deal is not closed. Contacted for a response, both Scoot and Bird said they declined to comment on speculation.

If accurate, it would be far from a merger of equals. Scoot was last valued at around $71 million, having raised about $47 million in equity funding to date from Scout Ventures, Vision Ridge Partners, angel investor Joanne Wilson and more.

Bird is significantly larger. Led by chief executive officer Travis VanderZanden, earlier this year the company was working on a round of financing reportedly worth $300 million at a $2.3 billion valuation. We’ve been able to confirm that this round has now closed, although we don’t yet know the final amount or who the investors are. (Backers of Bird include Sequoia, Index, Charles River Ventures, Tusk Ventures, Upfront Ventures and dozens more.) Scoot would be Bird’s first full acquisition.

Scooting toward consolidation

It’s still very early days in the scooter market in terms of consumer adoption, but that hasn’t stopped people from launching a lot of startups and raising funding to capitalise on what many believe will be a big opportunity longer term.

That promise is made bigger by the regulatory structure of the scooter market. Similar to their approach to bikes, many cities restrict the number of licenses they give out to companies to run on-street, hourly scooter services. Winning a license can give a company a near-monopoly on building a business in that city.

It also means that a combination between two companies whose geographic footprints do not overlap becomes a much cheaper and faster way of instantly creating a bigger business.

Notably, Scoot has a license to operate a pick-up/drop-off street service in the key market of San Francisco — where it competes with Skip, the only other licensed operator in the city. (Note: Bird last month did start up business again in SF, but only for the less popular offer of monthly rentals.)

What’s more, the two startups do not have any overlap in the rest of their footprints. Scoot is active in Barcelona, Spain and Santiago, Chile. Bird, on the other hand, has launched in about 100 cities spanning the U.S. and Europe, but its list does not include any of the cities where Scoot has rolled out its service.

Bird announced its new, two-seated electric vehicle earlier this week

On the vehicle front, the story is a little different. The two are providing, more or less, the same kinds of vehicles. Scoot has built out a network focused primarily on electric push scooters, seated scooters and electric bikes. Bird, meanwhile, has mostly built its service around electric push scooters, but just yesterday the company debuted its first seated vehicle to expand into a new product class.

Bird acquiring Scoot will help the two achieve better economies of scale in terms of vehicle purchasing power and device R&D.

It also helps them compete against the big boys. The market for scooters and other two-wheeled vehicles (collectively termed “micro-mobility”) is still a relatively new one, but Lyft and Uber have also waded in early to establish market share, as part of their own strategies to position themselves as the go-to platforms for any and all transportation needs.

Bird buying Scoot is one likely M&A move, but it’s not the only one.

Sources have told TechCrunch that an Uber acquisition of Skip (the other provider in SF) could also be in the works. Skip, much like Scoot, is another small player in the e-scooter market. To date, it has secured $31 million in venture capital funding from Initialized Capital, Accel and others.

Uber is already an active acquirer in the area of mico-mobility. If you remember, it acquired JUMP Bikes for $200 million in April 2018.

Uber’s acquisition of JUMP wasn’t surprising. In January 2018, the ride-hailing giant partnered with JUMP to launch Uber Bike, which lets Uber riders book JUMP bikes via the Uber app.

Other acquisitions in the nascent micro-mobility space include Lyft’s purchase of Motivate, a deal announced roughly one year ago. Motivate, the oldest and largest electric bike-share company in North America, did not disclose terms of the deal, though reports indicated it was asking for at least $250 million.

Bird — founded in 2017 — has yet to announce any acquisitions, although a spokesperson for the company said there have been quiet acqui-hires before now.

It was itself the subject of acquisition rumors for several months in 2018, too. Prior to Uber filing to go public in what was one of the most highly anticipated initial public offerings of the decade, many expected it to shell out cash for either Bird or Lime. From what we know, Uber was in discussions to acquire Bird, but ultimately it wasn’t able to meet Bird’s steep asking price.

Bird CEO on scooter startup copycats, unit economics, safety and seasonality

The uncertain future of shared electric scooters

Published April 3, 2019

Cities all over the world have seen an influx of two-wheeled, electric kick scooters on the road over the last couple of years. Scooters from the likes of Bird, Lime, Spin, Uber’s JUMP, Lyft and others are all trying to own the first and the last mile. The first mile is often understood as the distance between a transportation hub and someone’s starting point while the last mile is the distance between a transportation hub and someone’s final destination. These companies want both, and some (Uber, Lyft) also want everything in between.

The rise of electric scooters is often compared to the rise of ride-hailing, but there are some key differences at play. For one, cities are in charge of regulation — not the states. And since these are much smaller vehicles, cities can easily pick them up and throw them in the back of a truck if they become a nuisance. Meanwhile, as part of city regulation, data-sharing is not optional — it’s a requirement in order for companies to receive permission to deploy scooters on city streets.

The startup ecosystem had become accustomed to the ethos of begging for forgiveness, rather than asking for permission. But that’s not the case with electric scooters. These companies have found their entire businesses to be contingent on the continued approval from individual cities all over the world. That inherently creates a number of potential conflicts.

It’s also unclear whether the increase in people riding scooters is indicative of people adopting shared services or simply adopting a new mode of transportation. Some industry insiders wonder if it’s just a matter of time between consumers ditch shared scooters in exchange for their own.

Between city regulators capping the growth of operators, the vast number of companies going after the first and last miles and the threat of the shift from shared to ownership, it’s all going to come down to the survival of the fittest.

At the mercy of cities

Unlike the ride-sharing market, electric scooter operators are entirely dependent upon cities. These cities, rightfully so, have a number of concerns ranging from safety to sidewalk congestion to equal access to transportation.

Bird has officially raised a whopping $300M as the scooter wars heat up

Published June 28, 2018

And there we have it: Bird, one of the emerging massively hyped Scooter startups, has roped in its next pile of funding by picking up another $300 million in a round led by Sequoia Capital.

The company announced the long-anticipated round this morning, with Sequoia’s Roelof Botha joining the company’s board of directors. This is the second round of funding that Bird has raised over the span of a few months, sending it from a reported $1 billion valuation in May to a $2 billion valuation by the end of June. In March, the company had a $300 million valuation, but the Scooter hype train has officially hit a pretty impressive inflection point as investors pile on to get money into what many consider to be the next iteration of resolving transportation at an even more granular level than cars or bikes. New investors in the round include Accel, B Capital, CRV, Sound Ventures, Greycroft and e.ventures; previous investors Craft Ventures, Index Ventures, Valor, Goldcrest, Tusk Ventures and Upfront Ventures are also in the round. (So, basically everyone else who isn’t in competitor Lime.)

Scooter mania has captured the hearts of Silicon Valley and investors in general — including Paige Craig, who actually jumped from VC to join Bird as its VP of business — with a large amount of capital flowing into the area about as quickly as it possibly can. These sort of revolving-door fundraising processes are not entirely uncommon, especially for very hot areas of investment, though the scooter scene has exploded considerably faster than most. Bird’s round comes amid reports of a mega-round for Lime, one of its competitors, with the company reportedly raising another $250 million led by GV, and Skip also raising $25 million.

“We have met with over 20 companies focused on the last-mile problem over the years and feel this is a multi-billion dollar opportunity that can have a big impact in the world,” CRV’s Saar Gur, who did the deal for the firm, said. “We have a ton of conviction that this team has original product thought (they created the space) and the execution chops to build something extremely valuable here. And we have been long-term focused, not short-term focused, in making the investment. The ‘hype’ in our decision (the non-zero answer) is that Bird has built the best product in the market and while we kept meeting with more startups wanting to invest in the space — we kept coming back to Bird as the best company. So in that sense, the hype from consumers is real and was a part of the decision. On unit economics: We view the first product as an MVP (as the company is less than a year old) — and while the unit economics are encouraging, they played a part of the investment decision but we know it is not even the first inning in this market.”

There’s certainly an argument to be made for Bird, whose scooters you’ll see pretty much all over the place in cities like Los Angeles. For trips that are just a few miles down wide roads or sidewalks, where you aren’t likely to run into anyone, a quick scan of a code and a hop on a Bird may be worth the few bucks in order to save a few minutes crossing those considerably long blocks. Users can grab a bird that they see and start going right away if they are running late, and it does potentially alleviate the pressure of calling a car for short distances in traffic, where a scooter may actually make more sense physically to get from point A to point B than a car.

There are some considerable hurdles going forward, both theoretical and in effect. In San Francisco, though just a small slice of the United States metropolitan area population, the company is facing significant pushback from the local government, and scooters for the time being have been kicked off the sidewalks. There’s also the looming shadow of what may happen regarding changes in tariffs, though Gur said that it likely wouldn’t be an issue and “the unit economics appear to be viable even if tariffs were to be added to the cost of the scooters.” (Xiaomi is one of the suppliers for Bird, for example.)