LIME

Is the micro-mobility industry a viable, long-term business? My firm MVP VC published research on it recently. “The micro-mobility business is relatively new and innovative, with a huge untapped opportunity. It is affordable for almost every socioeconomic group, reducing the wasteful use of resources for operating a large vehicle for only small distances. These new shared vehicles will continue to appear in cities across the world and will likely continue to do so for the foreseeable future.

The industry is still evolving and is on the right track to turn profitable. Most of the trips taken in the U.S. are within e-scooter range, and its affordable price provides a seamless solution to the last-mile problem. The increasing focus on e-scooter developments is bringing charging costs and e-scooter’s lifespan to profitable levels in an industry with strong demand. The industry is environmentally friendly, accessible to low- income groups, with a path to profitability.

There were 38.5m trips taken on e-scooter compared to a mere 3m trips of dockless bikes in 2018. At present, e-scooters are not profitable but, according to our estimates, can achieve profitability in the near future. As indicated in the chart below, an e-scooter generates a 70-cent profit per ride, which translates to a 19% take rate. The companies aren’t profitable because the life of an e-scooter is about two months, but it keeps gradually increasing due to innovations and more focus on their development.

The revenue model has a few challenges to reach profitability. The biggest one is the cost associated with battery charging. Since the e-scooters are dockless, by the end
of the day the e-scooters are all over the city, and they need to be charged to be operational the next day. Companies hire 3rd-party contractors to pick the e-scooters from all over the city (side-hustle alert!), charge them overnight and deploy them on the streets the next day. This approach is expensive, absorbing 50% of the revenue. Companies are developing new approaches to reduce charging costs like swappable batteries.”

I know at least 10 athletes and entertainers who have invested. What are your thoughts on this space?

    Write a comment