The Accelerating Pace of the Micromobility Race
The transportation sector is currently experiencing a period of intense disruption sparked by multiple societal, technological and regulatory factors. As the world emerges into the new normal, smart investors increasingly apply environmental, social and governance filters to their ventures. Big Tech has already seized the opportunity and been drawn to micromobility, with Amazon, Apple, Google and Microsoft all involved in the sector in some capacity – often creating the software and cloud services needed to support these innovative enterprises.
As a result, the micromobility industry is attracting attention. Opportunities for direct investment access to micromobility leaders currently in the late-stage and pre-IPO stages are increasingly popping up on investors’ radar screens. Today that translates into exciting opportunities for private markets investors who prefer to avoid the scramble of an over-subscribed IPO but are attracted to a startup’s late-stage financing (i.e., the growth/profitability stage).
Micromobility – from bikes to hoverboards
Micromobility is a category of small, lightweight vehicles operating at speeds typically below 25 km/h (15 mph). They are driven by users personally and exclude vehicles with internal combustion engines and top speeds of more than 45 km/h (28 mph). Vehicles include bikes, scooters, skateboards and their electric counterparts, as well as Segways, hoverboards, and even electric water bikes. The market tends to focus on urban transportation and splits into shared or owned vehicles, mainly making short trips.
Urban mobility – a USD 70 billion market by 2028
Micromobility was not immune from the economic shock of COVID-19. Indeed, it was felt keenly at a time when the industry was gaining momentum. But as we emerge from the pandemic, the industry is making a powerful recovery. Governments are increasingly under pressure to minimize carbon emissions and reduce traffic congestion – the move towards smart city transportation is likely to accelerate at pace. McKinsey predicts that long-term passenger kilometers traveled using micromobility will experience a 5-10% boost by 2030. Businesswire believes the global micromobility market size will reach USD 69.32 billion by 2028, with CAGR registering 13.7% from 2021 to 2028 and with Asia estimated to account for the most significant share, expected to command USD 32.01 billion by 2028.
It only starts with environmental benefits
The benefits of micromobility – whether vehicles are rented or owned – are plentiful and compelling. Governments continue to look for ways to minimize carbon emissions from traditional fuel-based vehicles and improve air quality. Cities are actively disincentivizing and regulating private car travel to avoid traffic congestion and the associated health, environmental and productivity problems. Micromobility solutions are undeniably eco-friendly, quiet and exceedingly efficient. They also take up little room on the road and require minimal space to park or store. Rental is easy because the vehicles are mostly light in weight, so people don’t need to be insured.
Post-pandemic trips are set to rebound
Kilometers traveled using micromobility methods dropped during COVID-19 lockdowns. But McKinsey believes that private and shared micromobility solutions will experience a complete recovery in the number of passenger kilometers traveled, with no significant drop from pre-pandemic levels. Intention to use in the future has reportedly increased by 9% for private micromobility and 12% for shared.
Today, we know more about how COVID-19 is spread, and people’s fears about contact with a shared vehicle seem to have been assuaged. In addition, consumers understand that traveling outdoors (weather permitting) is safer to bridge short distances than by bus or subway train. This means that more people are trying it for the first time since the pandemic began.
Infrastructure investments provide tailwinds
Government investment in micromobility infrastructure is growing. New cycle lanes, ramps and docking stations are all helping to broaden access to alternative transportation options while improving the customer experience, reducing cost, and encouraging use. London, for example, has introduced 800 new e-bikes that are free for the first 10 minutes and then cost just 15 pence per minute after that.
Cost is falling – as vehicles become more reliable and serviceable
Industry players are consolidating; for example, San Francisco-based Lime recently acquired ‘Uber’s micromobility (e-bike and e-scooter) business. This consolidation trend could improve ‘players’ business cases and increase their profitability. And as demand increases, so does the scale of vehicle procurement. The vehicles themselves will therefore become more affordable, encouraging additional usage.
Product design has improved too, with more e-bikes and e-scooters enjoying a longer life, thanks to easier maintenance. In addition, operators are switching to more sustainable removable batteries, which can be swapped out by full-time staff rather than the expensive, inefficient gig-workers of old, or by taking them out of service on vans and driving them long distances back to warehouses to recharge. TIER Mobility, for example, now equips 100% of its fleet with swappable batteries.
Massive growth attracts investor funding
The shared micromobility services kickstarted growth from companies like Bird Rides, Lime, Spin, and Uber, who have seen exponential customer adoption aside from the 2020 COVID dip. Investment quickly followed. In Europe, for example, micromobility startups have raised more than USD 4 billion to date – Bolt has raised (USD 1.3 bn), TIER (USD 510 m), and Voi (USD 400 m).
Micromobility. Maximum potential.
Across the world, major cities are investing in alternative transportation infrastructure to facilitate a shift to small, easy-to-access, sustainable modes of transport. Milan, Paris, Brussels, Seattle, and Montreal created or extended their bicycle lanes and alternative transport paths. Consumers are demonstrating a willingness to use micromobility solutions post-pandemic, with data suggesting their trip distances are increasing. Cities are disincentivizing car travel in both overt and covert ways, including new infrastructure, parking fees, taxes, tolls, repurposing and zoning areas, and prioritizing alternative transport methods. In Italy, for example, the government offers significant subsidies for bike and e-scooter purchases.
Ultimately, consumers recognize the need to reassess their transport decisions and businesses such as TIER Mobility offer urban dwellers a green, clean and practical alternative to city car travel.
Consolidation of the micromobility market players could further improve profitability through synergies and economies of scale as well as efficiencies in vehicle purchasing, payment processing, back-office activities, and insurance.
The sustainable investment trend continues.
Forbes describes 2020 as “… an impressive year for environmental, social and corporate governance (ESG) investing”. Investors are looking to develop a more socially responsible portfolio.
Contact Stableton or sign up to explore our investment opportunities
In the past, accessing a high-potential segment like micromobility meant seeking early access through venture capital funds (which, once well-established, might not even be interested in your commitment). In addition, it involved high investment minimums, cumbersome paperwork, scarce information (often not even knowing what you will be investing in), and long holding periods.
Today, there is an alternative. Accessing promising businesses via late-stage investment and pre-IPO investments is increasingly popular. For one, investors know the name of the company they are investing in. Secondly, as in the case of micromobility innovators, the product-market fit has already been established, and the path to profitability is clear.
To hop on an investment at this stage means a lot of upside potential, while the risk level stays relatively moderate.
Stableton is Switzerland’s leading provider for access to late-stage venture capital & pre-IPO Investments to smaller qualified investors. Our mission is to help investors get access to the otherwise secluded private investment market. With a minimum of CHF 10’000, this type of investing should be considered as part of a portfolio.
This article only scratches the surface of the opportunities late-stage VC and pre-IPO investments investing present. Contact your Stableton representative to learn more and find out about opportunities that exist right now.
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