The Los Angeles-area company is currently valued at $2.3 billion, up from just $60 million in February 2018, following a year of skyrocketing interest in micromobility. But Bird now seems to be running low on fuel, as it lost nearly $100 million in the first quarter of 2019 and its gross revenue shrank to just $15 million, down from $40 million in the previous quarter, according to internal data obtained by The Information.
And despite the $450 million round it raised in January, Bird is seeking more funding. It has less than $100 million in cash and is hoping to raise $200 million to $300 million by the end of the summer, again per The Information. The company has collected more than $700 million to date from VC heavyweights including Accel, Sequoia and Greycroft.
Withering revenues and continuing losses are bad signs for any business, even if it's a multibillion-dollar startup with an enviable valuation history. The Information reported that in an attempt to reduce the cash burn, Bird laid off about 5% of its staff early this year and ceased operations in 44 of its 103 markets across North America. But the company remains optimistic about its chances elsewhere. Bird announced plans on Wednesday to open its largest European hub in Paris, which draws millions of tourists each year and where the company says its scooters have been well-received. The new office would employ 1,000 people over the next couple of years.
What happened to the micromobility boom?Bird wasn't the only company to reap the rewards of record dealmaking in the micromobility space last year. In 2018, deal flow accelerated significantly, as VCs were cutting hefty checks to fast-growing bike-sharing and scooter-sharing startups that, along with Bird, included Lime, Spin and Skip. The sector also witnessed a string of acquisitions, including Uber's purchase of Jump and participation in Lime's $335 million round, Lyft's deal for Citi Bike-operator Motivate and Ford's agreement to acquire Spin for $100 million.
Globally, VCs poured around $3.8 billion into the sector across 44 deals last year, per PitchBook data, but their interest in micromobility has taken a serious hit in 2019, with less than $1 billion in capital invested through the first half of the year.
One of the biggest concerns for investors—and indeed one of Bird's biggest challenges when it comes to raising more capital—is likely to be the quality of the hardware used to create the scooters themselves. If the material is not durable enough to last, the bottom-line numbers of any micromobility startup are bound to take a hit. And despite the buzzy startups, mega-rounds and unicorn valuations, the industry is at a nascent stage and still exploring the most cost-efficient components that require minimal repair. Bird's biggest cost per ride is the depreciation in the value of its scooters, per The Information, and a key part of its pitch to potential investors is its new line of scooters, which the company says are made of heavier and more durable material.
Another reason investors might hesitate to shell out more cash is the industry's seasonal risk. The micromobility boom has spread around the world, but not all markets are blessed with warm days throughout the year, and Bird's weak showing in the winter could easily be explained by the inherent seasonality of its industry.
It remains to be seen whether Bird will successfully convince investors that its scooters are a wise investment. But its competitors in the space are sure to be watching closely.
Featured image via Unsplash