Deal will see e-scooter rental service take over Uber’s e-bike division Jump
Uber is leading a $170m investment in Lime, providing a bailout to the Silicon Valley-based e-scooter rental service, which was forced to take a sharp cut in its valuation to close the deal.
As part of the transaction, Lime will take over Uber’s e-bike rentals service, Jump, consolidating its position as the largest provider of “micromobility” services in terms of geographic footprint.
At the same time, Wayne Ting, a long-serving Uber manager who moved to become Lime’s operations chief in late 2018, will take over as Lime’s chief executive in its second leadership change within 12 months. His predecessor, Brad Bao, will now serve as Lime’s chairman.
“This funding will give us the support we need to weather Covid-19 and more importantly come back stronger when cities come back” from lockdowns, Mr Ting said.
Like other tech companies, from Zoom to Shopify, Lime is hoping that the pandemic provokes a change in behaviour that outlasts the current crisis. For bike and scooter operators, that means virus-conscious commuters swapping trains and buses for rides in the open air.
After pulling its scooters from dozens of cities in mid-March, Lime is now resuming operations in around 12 markets, including Berlin, Warsaw and Tel Aviv, offering discounted rides to “essential” workers.
“This is exactly the moment for micromobility,” Mr Ting said. “Not only are our old ridership coming back in a rapid way, we are reaching all these new riders who may not have given Lime or micromobility a look pre-Covid-19.”
Uber will list Lime’s green-and-white scooters alongside Jump’s bright red bikes within its own app, while Jump bikes will be available to rent via Lime’s app. Over time, the Jump brand would be phased out, said Mr Ting.
Google’s parent Alphabet and its venture arm, GV, are both topping up their existing investments in Lime as part of the deal, alongside Bain Capital Ventures and others.
“It’s a sign that, even through these turbulent times, people believe in micromobility,” Mr Ting said.
However, Lime’s valuation will fall from more than $2bn last year to about $500m today, according to two people familiar with the terms. The Information website previously reported Lime’s fall in value. A Lime spokesperson would not comment on the specific terms but confirmed that its valuation was below its last round.
As part of the deal, which is structured as a convertible loan, Uber will have an option to buy Lime outright in the coming years. Lime could also choose to proceed with an initial public offering or continue to fundraise privately, the spokesperson said.
The scooter industry’s rise and fall in fortunes has been rapid, even by Silicon Valley standards.
Lime, in which Uber first invested in 2018, has now raised about $940m since it was founded just over three years ago. However, after burning through hundreds of millions of dollars to flood dozens cities with scooters, the company has been forced to change course to conserve cash.
The company told investors last month it had about $90m in cash on hand. Earlier this year, it was spending about $20m per month to fund operations, people briefed on the numbers said.
Lime has already made two rounds of staff cuts this year, first in January and then dozens more last month as the pandemic intensified.
“We were on the path to being profitable this year,” Mr Ting said. “With Covid-19, that is going to be delayed slightly. By doubling down our focus on operations and unit economics, I have every confidence that we will be profitable [cash flow positive] in 2021.”
