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Electric bike-sharing startup Wheels raises $37 million in investment


In the on-demand mobility segment, electric bike-sharing startups are proliferating. A 2018 research report crunched the numbers and concluded that the electric scooter industry was indeed biting into the taxi-hailing market, especially across crowded urban spaces in the likes of San Francisco and New York.

This development compelled companies like Uber and Lyft to move out from their stronghold taxi-hailing market to look at ways of expanding into this mobility alternative. An e-scooter war ensued, with over two dozen companies in contention, fighting it out to gain limelight, consumer attention, market share and funding. Investor interest in the electric bike-sharing segment  burgeoned, as startups like Bird and Lime achieved unicorn status in record time.

Wheels, an e-scooter startup founded by brothers Jonathan and Joshua Viner, has received $37 million in funding from Tenaya Capital, Bullpen Capital, Naval Ravikant, and others. The Viner brothers move into the on-demand mobility segment from Wag, a dog-walking niche startup which they left in early 2018. They’ve been joined by veterans in the field to help direct company operations – Marco McCottry, an ex-Uber and Bird executive, and Ben Shaken, former director of product at Lyft.

One of the reasons the e-bike segment generates so much interest is how profitable it can be at economies of scale. The first thing to consider is the procurement costs – the Ninebot e-scooters that most of the U.S. startups buy cost about $300 each (and that price might be lower when purchased in bulk). Bird says its e-bikes record between five and six trips daily, with a ride averaging 1.6 miles.

Conservatively assuming 7 miles per hour as the average speed of the bike during a trip, a rider uses it for around 11.2 minutes. Considering the cost of riding to be 15 cents per minute and a one-time take-out fee of $1, Bird ends up with approximately $2.68 per trip, and about $16 per day per bike. At this rate, a Bird bike could break even in less than 20 days, even accounting for the occasional bike repairs. Bike vandalism and damage is a concern, but they do not wreck margins, as companies like Lime have reported that less than 1 percent of its fleet is vandalized or stolen.

Though startups need to invest in marketing, pay workers who distribute, service and charge their bikes, and concentrate on expansion, the unit economics is still heavily in their favor. This makes e-bike startups eye candy to a potential investor, partly explaining why startups like Bird and Lime generate the funding they have received to date.

Being relatively new to the industry, Wheels recognizes the competition it needs to contend with, and has unveiled an electric-bike that is a touch different and more sophisticated to the bike variants fielded by the other startups. The Wheels e-bike is more robust and has a modular design with swappable parts and batteries. The bike has much bigger wheels than the existing e-bike models and also has a seat for people to sit on and a pedal-like stub for foot support.

“When we evaluated this market, we identified a major opportunity to better serve cities with a sustainability-first approach to dockless electric mobility,” Jonathan Viner said in a statement. “We’ve spent countless research and development hours on new manufacturing and servicing models to afford first-ever offerings such as swappable part replacements and removable batteries.”

With funding secured, Wheels looks to expand across Southern California during 2019, having received approval for its vehicles in Los Angeles. Wheels already runs 500 vehicles in San Diego, and now ranks first in daily trips made across San Diego’s Gaslamp Quarter, generating more than seven rides per day per bike.

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