A Lime investor predicts only 2 or 3 scooter players will win after COVID-19, meaning there’s going to be a major crunch in Europe

Paul Asel

Scooter startups are at a crossroads with COVID-19 and potential capital scarcity forcing an increased focus on sustainability and careful use of cash.
In the US, the market has matured, allowing two to three operators to thrive per city, but in Europe there are more than a dozen operators which investors say is impossible to sustain.
The re-opening of cities from lockdown is a litmus test of scooter companies’ ability to scale and survive after the COVID-19 crisis.
“The move towards efficiency is happening irrespective of COVID-19,” Paul Asel, managing partner at NGP Capital and an investor in Lime, told Business Insider in an interview.
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Scooter startups have been growing rapidly in Europe in recent years amid growing appetite for alternative urban transport options. That shift is set to as cities re-open from coronavirus lockdowns, and the public tries to avoid the scrum of buses, trams, and metros.

The advent of electric scooters in Europe became something of a smash and grab, with operators dumping thousands of scooters on the streets of major cities, often without approval from local authorities. Paris became the epicenter of some 12 operators competing for crowded curb sides, with the city eventually opting to only allow three operators going forward in its next tender process.

The French capital’s example could soon become the norm, according to Paul Asel, managing partner at NGP Capital and an investor in Lime. He predicts that investors will no longer pile millions of dollars into the industry. Instead there will be a greater focus on sustainability, which will lead to a more competitive ecosystem and, as a consequence, more failed companies.

“The move towards efficiency is happening irrespective of COVID-19,” Asel said in an interview with Business Insider. “The Uber/Lime deal showed that this market is a natural duopoly, having so many operators per city is a money-losing exercise which causes consumer confusion.”

Uber’s recent $170 million funding round into Lime was a de facto deferred purchase with the company’s valuation slashed by 80% with provisions in place for SoftBank-backed Uber to buy the scooter startup in two years.

Competition in markets is obviously nothing new, Asel cites automobile, radio, and telecoms companies as good examples of industries where dozens of operators are whittled down to two or three major winners.

The post-COVID comeback

Scooter operators have been starved of revenue due to coronavirus with almost all having to take their product off the streets in response to stringent lockdowns across Asia, North America, and Europe. The way in which cities respond to re-opening is key to the future of the industry, Asel says.

He quotes Thomas Kuhn, author of “The Structure of Scientific Revolutions” who said: “The significance of crisis is the indication they provide that an occasion for retooling has arrived,” and argues that retooling for scooters will take the form of people shunning public transport for fear of catching coronavirus.

Milan for example is widening cycling lanes, and the same is happening …read more

Source:: Business Insider


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