Bird, Lime Seek Capital At Lower Valuations As Investor Interest Wanes

Bird and Lime, the two electric scooter sharing startups, have been reducing the amount they are seeking to raise from investors amid rising competition and vandalism of their scooters.

The Wall Street Journal, citing people familiar with the discussions, reported that Bird plans to take on more investors at a $2 billion valuation. In the past, the startup has told potential investors it wanted to raise hundreds of millions of dollars at a much higher valuation. Those plans were altered due to a lack of interest on the part of investors. Meanwhile, the Wall Street Journal reported Lime has been telling investors that it is aiming to raise money at a valuation of $2 billion to $3 billion, which is lower than the $4 billion it had been seeking. The paper noted the valuations are still high, given both companies aren’t even two years old as of yet. What’s more, the Wall Street Journal reported the industry still has a lot of investors who are interested.

The paper noted that there are expectations that consolidation could take place in the marketplace, with Uber reportedly mulling a buy and holding talks with Bird and Lime in recent weeks. Bird has said it’s not for sale and isn’t in discussions with Uber, while Lime didn’t respond to the WSJs request for comment.

While the market has been booming for the two companies, it has been tougher to operate in than previously thought, noted the WSJ. One problem is that the scooters break down easily because they aren’t made for heavy use. In some cities the scooters have a two-month life cycle, which is often less than it takes to recoup the cost of the scooter. Vandalism is another big problem. The report pointed to Scoot Networks, a small San Francisco operator of electric Vespa-like scooters, which was granted the right in the summer to roll out a fleet of as many as 650 scooters. Within two weeks of its launch in October, more than 200 of its scooters had been stolen or destroyed via vandalism, chief executive Michael Keating told the paper, noting it was much higher than he estimated when starting the business. “Part of our assumption was that if the theft rate is really, really high and the vandalism rate is really, really high, there is no way these other companies would be in the business,” he said. “That ended up being an underestimate.” Scoot Network plans on rolling out a lock that riders will be required to use when placing the bike back on the bike rack.  For Bird and Lime’s part, the paper noted they have told investors that the problems are temporary. Both have launched scooters that are much more durable.