Because its inception, shared micromobility services have actually remained in a precarious position– one supported by millions of dollars in equity capital. But the COVID-19 pandemic has actually brought even more turmoil upon an industry that has actually long had problem with unit economics. It has actually led to mass layoffs, operation shutdowns throughout a number of markets and more combination.
Despite the struggles of individual operators, micromobility as innovation will come out of this stronger than in the past, market analyst Horace Dediu tells TechCrunch. Dediu, an analyst who coined the term “micromobility “and founded Micromobility Industries, sees the silver lining in the pandemic for micromobility as it associates with the adoption of public transit options. With ongoing concerns about the disease and social distancing, consumers may aim to alternative modes of transportation– ones that need fewer interactions with strangers. Just because a certain innovation takes off does not indicate the present slate of operators will benefit.
“The business involved might not survive a crisis,” Dediu states. “We don’t remember the truth there were 3,000 vehicle business in the United States prior to Henry Ford’s Design T. We do not remember all the electrical suppliers out there and the debt consolidation that occurred in the electrical field with Westinghouse. There’s a lot of historical referrals we can cite. But the truth of the matter is that up until the crisis there was an over-investment where most likely too much capital was allocated to the market chasing business designs which are not sustainable … I think there will be a washout with a sort of combination and we’re seeing that already.”
Previously this month, for example, Uber sold off DIVE to Lime, while simultaneously leading a $170 million investment in the micromobility startup. That financing round brought Lime’s assessment down 79 %, to $510 million, according to The Information. Last April, Lime was valued at $2.4 billion.
Article curated by RJ Shara from Source. RJ Shara is a Bay Area Radio Host (Radio Jockey) who talks about the startup ecosystem – entrepreneurs, investments, policies and more on her show The Silicon Dreams. The show streams on Radio Zindagi 1170AM on Mondays from 3.30 PM to 4 PM.