It’s difficult to walk around most major cities without seeing at least one rented scooter fly past, and investors are still keen to pump money into the startups behind the craze. But the success of the scooter sector may be difficult to maintain.
This week Dott, an Amsterdam-based scooter company raised $34 million, bringing its total funding to date to $56.6 million. EQT Ventures and Naspers led the round, with a number of other investors participating. That sum of money raises eyebrows particularly as the company was only founded last year. But in the scooter world, money has been pouring in.
The two main players in this space are Lime and Bird. Lime was launched in January 2017, but started out as a bikeshare offering. But around 16 months ago the company switched to scooters, and expanded rapidly. Lime, like Bird, puts undocked electric scooters on the streets of a city, and users locate, unlock, and pay for a ride on them via their app. Lime’s total number of rides has reached 50 million globally in less than two years, and the company itself now has over 700 employees in 25 countries. That growth has been fueled by massive investment – Lime has raised $777 million and is valued at $2.4 billion.
Bird has a similar early tale of success. The company was founded in September 2017 and reached 10 million rides within a year. Funding soon followed. To date the Santa Monica-based startup has raised $415 million and is thought to be valued at $2 billion.
Dott, the European competitor, uses a slightly different business model than Bird and Lime. The two market leaders use crowd labor to collect and charge their scooters, utilizing the gig economy to lower costs. Dott has instead hired more staff and has its own warehouses and repair vehicles. Rather than relying on cheaper, part-time labor, the company hires full-time employee and uses third-party logistics providers.
Whether that approach is more future-proof remains to be seen, but the industry as a whole has faced major speed bumps in recent times. In March Bird underwent layoffs, and in the same month Lime switched its CEO – neither a good sign for companies boasting hundreds of millions of investment. Local governments have fought back against the scooters, including in Nashville where a pilot to test e-scooters was cancelled after someone died. People are also throwing the scooters into lakes, streams, and rivers.
Dott’s business model breaks from the fast-paced growth of Lime and Bird that has landed them in difficulties recently, but the whole scooter landscape looks fraught with challenges right now. In 2018, it was rumored Uber would move into the space with a giant acquisition of either Lime or Bird, but nothing ever materialized. The next 18 months will determine how much road is ahead for an industry that has grown so rapidly.