The electric scooter sharing industry was booming before the COVID-19 pandemic. Now, the same cannot be said. With millions practicing social distancing, profits for companies like Bird and Lime have plummeted. Fortunately, the latter just got a massive cash injection.
Lime announced on Thursday that it has raised $170 million in funding. Notably, Uber is the leading investor for the round. This brings more than just cash for the scooter startup—it launches a powerful partnership to help boost its business in a post-coronavirus world.
Lime’s new funding round isn’t your average search for cash. It includes participation from many of the startup’s past investors, including Alphabet, Bain Capital Ventures, GV, and more. However, Uber’s participation is particularly interesting as it also comes with an additional asset.
As part of the deal, Lime will acquire Uber’s micromobility subsidiary Jump. The service never really took off at the same level as competitors like Lime and Bird. However, for Lime, having Jump in its portfolio is a useful addition.
In the future, it plans to add integrations between its own app and the newly acquired platform. For now, both apps will remain active. It’s unclear whether users will be able to rent Lime scooters within the Uber app and vice versa. It sounds like that may be the path the two are taking, but it hasn’t been confirmed.
Uber CEO Dara Khosrowshahi says, “We’re glad that our customers will continue to have access to bikes and scooters in both our apps because we believe micro-mobility is a critical part of the urban landscape, now more than ever.”
Meanwhile, Uber benefits by offloading the salaries of its Jump employees. They will transition onto Lime’s payroll in the future.
Things have been looking grim for the shared transportation industry. It simply doesn’t mix well with social distancing. When and if things return to normal, it’s unclear whether ridesharing and scooter sharing will ever reach their pre-pandemic peaks.
Uber recently laid off nearly 4,000 employees in a cost-cutting measure to offset its losses from decreased ridership. At the end of April, Lime laid off 13 percent of its workforce—about 80 employees. Afterward, its CEO said, “Almost overnight, our company went from being on the eve of accomplishing an unprecedented milestone—the first next-generation micro-mobility company to reach profitability—to one where we had to pause operations in 99% of our markets worldwide to support cities’ efforts at social distancing.”
Lime’s valuation has plummeted by 79 percent due to the effects of the pandemic. With its latest funding, it is now worth $510 million. In April of last year, the startup was valued at $2.4 billion.
Although current financial reports are bad, future outlooks are even more uncertain. No one knows whether consumers are willing to start using shared services again at the same level they did prior to the emergence of COVID-19.
With its latest funding round, Lime stands a chance at survival. However, only time will tell if this is just a temporary fix to a much larger problem.