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Scooters-as-a-Service Are the Surprising New SaaS as 2 Start-Ups Position to Go ‘Unicorn’

Scooters-as-a-Service Are the Surprising New SaaS as 2 Start-Ups Position to Go ‘Unicorn’

Across US cities, services offering electric scooters that can be picked up on the street, activated via an app and then left at the side of the road or propped against a tree when you are done with them have exploded from nowhere over the past few months. Having only deployed their scooters in Santa Monica, California, in September last year, tech start-up Bird closed a $100 million funding round in March. The company is now reportedly moving to raise a further $200 million.

Rival Lime, which also provides electric bikes, is to raise a similar sum. The new investment rounds would take the value of both companies towards the $1 billion mark – the definition of a ‘unicorn’ company. Two other electric scooter start-ups, Skip and Spin, have also raised $6 million and $8 million respectively.

In March this year, Bird and Lime launched in San Francisco. They sought no permission from city authorities, taking advantage of the fact city bylaws neither explicitly permitted or banned their business model. Overnight, the companies’ scooters appeared on the city’s streets.

Bird, which is run by former Uber executives, Lime’s co-founders and management also mainly come from Uber and Lyft, already has 50,000 regular users of its scooters in Santa Monica. In San Francisco riders covered more than 60,000 miles in 17 days. To use a scooter, its barcode is scanned by a smartphone app, activating the vehicle.

There is a base charge of $1 and then 15 cents a minute. The scooters have a top speed of 15 mph and are intended to be used for the kind of ‘last mile’ journeys that are too short to make waiting for public transport worthwhile but too long to walk comfortably or quickly. Electric scooter companies argue their service will encourage users to leave their cars at home by making a commute or short journey faster and easier.

Despite the viral adoption rate of this example of the latest technology in the world of urban transport, not everyone is happy about the overnight scooter boom. Residents and city authorities complain that the hordes of scooter riders can prove a nuisance and the large numbers of abandoned vehicles around the streets amounts to littering.

Scooter users are supposed to stick to the roads or cycle lanes and have a driving license. A driving license copy has to be uploaded before the Bird app can be downloaded. Riders are supposed to also wear helmets. However, in practise, there are no specific laws around where electric scooters can and can’t be ridden and safety regulations around that. This means that it is practically difficult to control.

Bird, Lime and the other scooters-as-a-service start-ups will, however, now have to start playing by the rules. There has been relevant tolerance by authorities but San Francisco’s city attorney has also threatened to impound the vehicles, calling them unlawful, dangerous and symbolising growing ‘tech arrogance’.

San Francisco and other cities are now moving to close the loopholes that allowed Bird, Lime, Skip and Spin to launch almost unrestricted. Permits will now be required and the city has agreed to a 24-month pilot programme under which permits will be issued to no more than 5 companies and allowing up to 2500 scooters in the city. Bird has also been fined $300,000 for operating without a business license or vendor permits.

However, it looks like electric scooter hire companies are here to stay. Lyft and Uber have also stated they are interested in the space with the former already in talks with San Francisco city officials. Bird and Lime will be spending their war chests to expand and hopefully grow big enough market share to compete once the big boys enter the space.

Bird has ambitious plans to launch in 50 new locations this year with the UK a high priority. Stephen Schnell, Bird’s vice president of operations, noted that cities with a good bicycle land infrastructure are of greatest interest to the company’s initial expansion plans.

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