Uber is Leading a $170 Million Investment in Electric Scooter Sharing Startup Lime
【Summary】Ride hailing company Uber Technologies Inc. is leading a $170 million investment round in San Francisco-based electric scooter sharing startup Lime. As part of the investment, Lime has acquired Uber's JUMP’s e-bike business operations and will further expand its mobile app integration with Uber.
Ride hailing company Uber Technologies Inc. is leading a $170 million investment round in San Francisco-based electric scooter sharing startup Lime. Also participating in the investment are Alphabet, Bain Capital Ventures, GV and other existing and new investors.
As part of the investment, Lime has acquired Uber's JUMP's e-bike business operations and will further expand its mobile app integration with Uber.
In addition to announcing the $170 million investment from Uber, Lime promoted its Global Head of Operations and Strategy Wayne Ting as the company's new Chief Executive Officer. Wayne joined Lime in Oct 2018 as and has been instrumental in steering the company's path to profitability, Lime said.
Lime operates its electric scooter sharing service in dozens of U.S. cities spread across 25 states and in Europe.
"Lime has the operational expertise and undivided focus needed to build a scaled, sustainable micro-mobility business," said Dara Khosrowshahi, CEO of Uber. "We're glad that our customers will continue to have access to bikes and scooters in both our apps because we believe micro-mobility is a critical part of the urban landscape, now more than ever."
Lime is currently valued at about $510 million, people familiar with the terms said to Bloomberg, asking not to be identified. However, Lime's $510 million valuation is far less than the $2.4 billion investors priced the company at during a funding round last year.
According to a March report from The Information, Lime has been seeking emergency funding from new investors at a lower valuation of just $400 million. Lime has not commented on the valuation in the statement.
On April 30, Lime laid off 13% of its workforce as it struggled with a loss of business due to the COVID 19 pandemic.
"Almost overnight, our company went from being on the eve of accomplishing an unprecedented milestone — the first next-generation micro-mobility company to reach profitability — to one where we had to pause operations in 99% of our markets worldwide to support cities' efforts at social distancing," Lime CEO Brad Bao said in a letter to company employees.
"Needless to say, while we thought we had planned for all possibilities this year, we did not anticipate a global pandemic."
Electric Scooter Startups Have Struggled to Become Profitable
Electric scooter sharing was a hot new mobility option just two years ago with investors pouring money into the space called "micro-mobility." However new startups entering the space left it crowded with electric scooter sharing companies essentially offering the same exact service. The crowded field made it difficult for electric scooter rental companies to achieve and sustain a profitable business model in cities around the world.
In addition, scooter-sharing startups are facing opposition from city officials over complaints from residents that customers are riding the scooters on sidewalks and leaving them scattered and tipped over on city streets when they were done riding them.
City officials in San Francisco for example, placed a limit on the number of scooter companies permitted to deploy scooters to just four companies, Jump, Lime, Scoot and Spin. The move was made to address residents' concerns of pedestrians having to dodge scooters on the sidewalks and piles of discarded scooters being dumped in front of building entrances.
The city also capped the number of total scooters on the streets to 10,000 with a 2,500 scooter limit from each of the four companies only after meeting consistent service level requirements set by San Francisco's Municipal Transportation Agency (SFMTA).
Uber's investment in Lime comes after a big investment in shared electric bikes in 2018. Uber purchased New York-based bike-sharing startup JUMP in April 2018 for around $200 million as a way to diversify its mobility offerings, allowing customers to book a nearby electric bike right from the Uber app or switch to a e-bike for the final leg of their Uber trip.
Uber-owned Jump was the first company to provide stationless bike sharing in San Francisco. The ride-hailing company first announced it was working with Jump in a pilot program with 250 of JUMP's e-bikes in San Francisco in January 2018.
For Uber, the big investment in Lime shows that its confident that sharable e-scooters can be a profitable business given the right execution. However, so far profitability has been elusive for the new crop of micro-mobility startups.
One of the most valuable and fastest rising e-scooter startups was Bird when it launched in Sept 2017. The company attracted significant investments which valued the young company at $2.5 billion as of last year. However, Bird struggled with profitability while trying to rapidly expand to new markets. Then the coronavirus pandemic led to a dramatic drop in ridership for e-scooter startups. Bird laid off over 25% of its employees in mid-March.
Uber itself laid off 3,700 employees on May 6 equal to 14% of the company, as the ride-hailing company is facing a sharp decline in ride hailing due to the coronavirus fears and mandatory shelter-in-place orders for large parts of the U.S.
However, just as Uber placed its bet on shared e-bikes in cities to supplement its car rides, the ride-hailing giant might be able to integrate the electric scooters in its mobility offerings and still be able to turn a profit. For that we'll have to wait and see.
Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.
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