Sep 19, 2018

How scooter startup investors justify their unicorn valuations

Illustration:Rebecca Zisser / Axios

E-scooter rental startups are facing strict limits and barriers in a number of cities, but venture capitalists still say their astronomical valuations for companies like Bird and Lime are reasonable.

The bottom line: Investors believe the restrictions are temporary.

Cities are in the studying phase, investors told Axios.

  • “I think it’s really hard for investors like me to not believe that over time regulations will loosen up,” DCM Ventures principal Kyle Lui, who led his firm’s investment in Lime.
  • And there are silver linings. “I think it will prevent a lot of new players potentially getting funded… The companies that have the proper funding will have the resources to do local lobbying,” Lui adds.
  • Caps can also help avoid the oversupply problem China saw with bike-sharing, says says Bird investor David Sacks.
  • Some cities like Santa Monica are using flexible caps based on scooter utilization levels, which could ensure reasonable supply and demand ratios, adds Sequoia Capital partner Roelof Botha, who led his firm's investment in Bird.

They believe San Francisco was an outlier when it didn't pick Bird or Lime for its pilot program.

And there's always the rest of the world, as both companies already are expanding outside the U.S.

  • Even a particular region can be adequate. “I don’t think Grin has aspirations to be global, they’re very focused on Latin America,” says Lui, whose firm also invested in the Mexico-based scooter startup. “You see a lot of highly successful local ride-sharing companies."

Still, some investors are waiting until cities more fully embrace scooters.

  • "It won’t be able to ramp up the way that Uber could,” says Menlo Ventures partner Shawn Carolan, who recently led his firm's investment in Skip. “It’s gonna be quick, but not ‘Uber quick.’”

Go deeper

Trump rules out quarantine in New York, New Jersey, Connecticut after pushback

President Trump on the White House grounds on Saturdya. Photo: Sarah Silbiger/Getty Images

President Trump tweeted Saturday night that he's decided not to introduce quarantine enforcement measures fo New York, New Jersey and parts of Connecticut, but a "strong" travel advisory will be issued for those states.

Why it matters: The president said hours earlier he was considering the move to combat the rise in novel coronavirus cases. But he received pushback, most notably from New York Gov. Andrew Cuomo (D), who told CNN it would cause "chaos." "This would be a federal declaration of war on states," Cuomo added.

Go deeper: Updates on coronavirus in the U.S.

Trump weighs quarantine of New York, New Jersey, Connecticut

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios

President Trump said Saturday he's considering a short-term quarantine of New York, New Jersey and parts of Connecticut, which have already taken steps to help residents isolate. Gov. Andrew Cuomo reacted to Trump's comments by telling CNN, "This would be a federal declaration of war on states" and that it would cause "chaos."

The big picture: With more than 121,000 people infected, the U.S. has the most COVID-19 cases in the world, exceeding China and Italy, per data from Johns Hopkins. A second wave of American cities, including Boston, Detroit, New Orleans and Philadelphia, are reporting influxes of cases.

Go deeperArrowUpdated 34 mins ago - Health

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 7:30 p.m. ET: 660,706 — Total deaths: 30,652 — Total recoveries: 139,304.
  2. U.S.: Leads the world in cases. Total confirmed cases as of 7:30 p.m. ET: 121,478 — Total deaths: 2,026 — Total recoveries: 1,072.
  3. Federal government latest: President Trump is considering a quarantine on New York, parts of New Jersey and Connecticut.
  4. State updates: Alaska is latest state to issue a stay-at-home order — New York is trying to nearly triple its hospital capacity in less than a month and has moved its presidential primary to June 23. Some Midwestern swing voters that supported Trump's handling of the virus less than two weeks ago are now balking at his call for the U.S. to be "opened up" by Easter.
  5. World updates: In Spain, over 1,400 people were confirmed dead between Thursday to Saturday.
  6. 🚀 Space updates: OneWeb filed for bankruptcy amid the novel coronavirus pandemic.
  7. Hollywood: Tom Hanks and Rita Wilson have returned to U.S. after being treated for coronavirus.
  8. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk
  9. Other resources: CDC on how to avoid the virus, what to do if you get it.

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