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

Virginia Gov. Ralph Northam tests positive for coronavirus

Photo: Zach Gibson/Getty Images

Virginia Gov. Ralph Northam (D) and his wife, Pamela, both tested positive for coronavirus, his office announced on Friday.

The state of play: The Northams were tested after one of their staff "who works closely within the couple's living quarters" tested positive. The governor is asymptomatic, while his wife is "experiencing mild symptoms." They plan to isolate at home for 10 days.

Ina Fried, author of Login
2 hours ago - Technology

Amazon wants to flood America with Alexa cameras and microphones

Photo: Amazon

In a Thursday event unveiling a slew of new home devices ahead of the holidays, Amazon made clearer than ever its determination to flood America with cameras, microphones and the voice of Alexa, its AI assistant.

The big picture: Updating popular products and expanding its range to car alarms and in-home drones, Amazon extended its lead in smart home devices and moved into new areas including cloud gaming and car security. The new offerings will also fuel criticism that the tech giant is helping equip a society built around surveillance.

Ben Geman, author of Generate
2 hours ago - Energy & Environment

Oil's turbulent long-term future

Illustration: Aïda Amer/Axios

The oil sector is facing risks from all sides.

Why it matters: Risk in the industry is nothing new. But these are especially turbulent and uncertain times. The industry's market clout has waned, the future of demand is kind of a mystery, and future U.S. policy is too, just to name three.

Get Axios AM in your inbox

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Subscription failed
Thank you for subscribing!