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E-Scooters: the bull and the bear

More scooters are hitting the streets, but investor sentiment is still mixed.

It is a truth universally acknowledged that a popular consumer product does not always make a great investment. The e-scooter craze is a recent example.

“Even if scooters become ubiquitous that doesn’t mean that any individual scooter company will generate outsize returns,” said Dan Hoffer, managing director of Autotech Ventures, a Menlo Park, California-based firm. “The risk for the industry is around the defensibility for any individual company.”

Autotech invests exclusively in mobility companies but so far has steered clear of scooters. “We have always been concerned about the defensibility of scooter companies,” Hoffer said, “and that’s why we don’t have any in our portfolio.”

Paul Asel, managing partner at NGP Capital is more optimistic.


“I take the long-term view,” said Asel, whose Palo Alto, California-based firm is invested in Lime, one of four scooter companies that recently won the right to rent out 1,000 scooters in San Francisco. The first- and last-mile space is about 50 percent of the transport pie, Asel said, and accounts for a disproportionate amount of the transport costs for commuters.

“So there is a tremendous benefit to making that last-mile more cost-efficient,” Asel said, adding that he continues to view scooters as “an important cog in the system” that will defray costs and congestion caused by cars.

“We’re very happy investors in Lime. We’re seeing great traction.”

The hype cycle


Investor sentiment on scooters is still a mixed bag. On the one hand there are negative market signals, with the scooter sector raising around $795 million from investors in recent months, compared to the $4.8 billion it secured from investors in 2018, according to data research firm Pitchbook.

“Initially sentiment was really exuberant; there was this idea that e-scooters were going to save the world,” Asad Hussain, Pitchbook’s mobility-tech analyst, told FreightWaves. “Then things quickly got really negative, and sentiment troughed.”

But already the hype cycle has moved into the next phase, he said, with more cities coming back around to the idea of e-scooters and e-bikes as the future of urban transportation.

Tougher models

One reason Hussain is increasingly bullish on scooters is their improved durability. “The main delta for whether or not these scooters are sustainable has to do with how long-lasting they are.”

The first generation, he said, was sourced from Chinese suppliers building for personal use, not the American scooter-sharing market, where riders are much harder on the equipment.

As a result, a lot of the early e-scooters lasted less than a month. Compare that to the cost of those scooters at $400 each, Hussain said, and “that’s no way to make money.”  From his perspective, the biggest driver of “margin positive is: ‘how many days can you get scooters to be operational?’”

As e-scooter companies have shifted to longer-lasting vehicles, the business model is starting to make sense, according to Hussain, although he qualified that statement by saying questions remain whether new funding rounds will close.


Bird and Lime are reportedly in the process of raising additional funding, and Bird is rumored to have a valuation of $2.5 billion. “These are high valuations especially as compared to likely revenue run-rates for these companies so far,” Hussain said. 

Hoffer cited the acquisition of the electric vehicle company Scoot by Bird a few months ago. That deal was rumored to close at around $25 million, less than half the amount that investors put into the company.

“Investors lost money on Scoot, and that’s the data point for the industry from a mergers and acquisitions perspective,” he said. “It’s possible we’re seeing a bit of a shakeout with smaller players consolidating.”

The next big thing

Hoffer and Asel delivered a few other prognostications regarding the next mobility service to watch.

“Any platform that increases the utilization of expensive fixed assets has potential,” said Hoffer, who sees bus transit as a promising category.

Just this past week Landline, the operator of a bus-to-airport network in the Midwest, closed a $3.85 million round led by Los Angeles firm Upfront Ventures. Targeting a niche market, Landline serves travelers who live in rural areas, helping them get to airports more quickly and cheaply.

Bus.com, an online platform for bus rentals, raised $19.6 million CAD in a round of funding in June.

As the mobility sector matures, new types of ride-hailing services are emerging, said Asel, whose portfolio includes Zum, a ride-sharing service for kids.

“What we are going to see over time is a broadening of vertical applications for transportation,” he said. “On the one hand, we’ll see specific applications for specific use cases. On the other hand, we are going to see the convergence of larger platforms that are going to be multi-purpose,” as Uber and Lyft diversify from ride-sharing into other micro-mobility services.

An old story

The e-scooter’s narrative arc – a frenzy, followed by a shakeout – is just another example of the business cycle running its course,  Hoffer observed.

“It happens in tons of spaces, personal computers, digital equipment companies, even cars – there were hundreds of car manufacturers.

“It’s the natural order of things for there to be a proliferation, then a cooling down and a consolidation.”

Linda Baker, Senior Environment and Technology Reporter

Linda Baker is a FreightWaves senior reporter based in Portland, Oregon. Her beat includes autonomous vehicles, the startup scene, clean trucking, and emissions regulations. Please send tips and story ideas to [email protected].