Twelve months ago, no one associated the word “bird” with anything other than the flying animal type. Now whisper the word in Silicon Valley, and investors will start to crow over which scooter company they’ve invested in and why it’s the future.
“If I were to simplify it, I think this innovation could be as profound as the automobile,” said Saar Gur, an investor at CRV. “But there are also lots of questions.”
Gur is just one of the investors to back Bird, the Venice, California-based scooter startup. This week, Bird announced that it had raised another $300 million, this time led by Sequoia, in a round that values the company at $2 billion. That’s zero to $2 billion in 12 months and over $415 million raised.
And while a $2 billion valuation spike in a year sounds like a lot, Lyft did one better. On Wednesday, it announced that it had raised another $600 million in a round from Fidelity, which has now invested over $800 million in the ride-sharing startup. The new valuation? $15.1 billion. That’s double Lyft’s valuation at this time last year.
The dramatic jumps in valuation can be attributed in part to the fear of missing out on the next Uber or Lyft (or people playing catch up and getting into the rounds now), said Gartner analyst Mike Ramsey. But the bigger picture is the change in business model and moving from an asset-based company to a continuing-revenue based service, he told Forbes. Why would you sell a car when you could continually charge people to use it?
“That is literally how these valuations are getting blown up. Instead of just selling this scooter for a hundred bucks, this scooter will generate $1000 in revenue,” Ramsey said.
It’s an insight that Gur credits to Travis VanderZanden, the CEO and founder of Bird who previously worked for both Lyft and Uber. “He took an off the shelf electric scooter that was not obvious, and to Travis’ credit, kinda invented the category,” Gur said.
Now both Uber and Lyft are trying to get into the scooter game, and Chinese bikesharing giant Ofo, which is currently valued at $3 billion, is also preparing to launch scooters in the US market. Given the capital-intensive nature of the business where companies have to buy thousands of scooters and pay people to charge them, it makes sense why Bird has to raise fast before it gets outspent by well-capitalized copycats. It’s a lesson, Gur said, that investors have already learned from Uber and Lyft’s playbook the last 10 years.
While Uber has raised five times more than Lyft, its US competitor hasn’t been left behind. Several investors told Forbes that they’re being frequently approached to sell their shares, but also that it’s never been a better time to hold. While Lyft got a bump from Uber’s misfortunes last year, it’s sustained the momentum and growth instead of falling back, said two investors close to the company. Lyft estimates that it now has 35% of US market share, up from 22% in January 2017 before Uber got hit with scandals.
“Lyft has been really good at maximizing their opening, which looked slim a couple years ago and now they’re back in the game,” Ramsey said.
And if you ask Gur, the Bird investor, the next phase of mobility companies right now are just singing the national anthem -- they haven’t even started playing ball yet. There could still be other disruptors still to come, which may even upset the hold Uber and Lyft have on ride-sharing, Ramsey said.
“The race isn’t totally over for new mobility,” Ramsey said.