Wind, rain and snow are threatening to put a damper on the rapid growth of electric scooter start-ups just as they are looking for new investment. So fledgling companies Bird and Lime are trying a new tactic to survive their first winter: migration.
“The seasonality is real,” said one scooter investor. “People don’t want to ride scooters in the snow.”
The start-ups believe the solution is shipping scooters from one city to another. “Birds can fly south for the winter,” said David Sacks, co-founder of Craft Ventures, an early investor and board member at Bird.
In less than a year, stand-up e-scooters have gone from a niche form of transport to one of Silicon Valley’s most lucrative new ideas. Bird and Lime notched up rides totalling more than 10m miles apiece by September, and now operate in more than 100 markets each.
But the billion-dollar valuations that were won earlier in the year had come before either Bird or Lime had seen how the changing of the seasons might damage demand for their electric two-wheelers.
About a third of Bird and Lime’s current markets suffer from snow or heavy rain, and more recently, Bird has been focusing its expansion on warmer areas such as Bakersfield and Santa Ana in southern California, as well as cities in Latin America and Asia. Late last month, Lime replaced dozens of scooters in Salt Lake City with e-bikes.
Moving the scooters around is still costly — adding to what some investors say are monthly cash burns already running into the multimillions.
That is adding urgency to fundraising efforts at both Bird and Lime, according to people familiar with the matter. Some investors say that seasonality, as well as safety concerns, intensifying competition and the growing threat of litigation, have forced the companies to rein in expectations that their valuations can see another sharp increase.
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