Bird Rides, the Santa-Monica e-scooter company that was once a startup darling but saw ridership plunge during the pandemic, is planning to go public through a so-called blank-check company, dot.LA has learned.
Bird is preparing to merge with Switchback II Corporation, a Dallas-based blank check company focusing on companies reducing carbon emissions, according to documents reviewed by dot.LA. Switchback has been marketing a $200 million PIPE offering in recent weeks that allows investors to buy shares of Bird at the IPO price.
Bird will receive hundreds of million in cash through the deal, which it can use to fund its operations as it struggles to achieve profitability and to expand to more markets. Last month, the company announced plans to double the size of its European operation, spending $150 million to enter 50 new cities.
The transaction values Bird at $2.3 billion, below the $2.85 billion valuation it reached in the beginning of 2020. But that was before the pandemic, which drove 2020 revenue down to $95 million, a 37% decline from 2019, according to a deck pitching the deal seen by dot.LA.
Neither Switchback nor Bird's media relations team responded to a request for comment.
The financials included in the slides reveal a company quickly burning through the $1.1 billion of cash it has raised since 2017, with a $226 million adjusted EBITA loss in 2019 and a $183 million loss last year.
However, Bird expects to trim this year's losses to $96 million and to $28 million in 2022 before reaching profitability in 2023. But that is predicated upon bringing in $815 million in 2023 revenue. In pre-pandemic 2019, the company generated $151 in revenue. It expects to bring in $188 million this year.
Bird, desperate to preserve cash soon after the seriousness of COVID became clear, laid off 406 employees via a Zoom call that former employees described as dystopian. The move reduced the company's Santa Monica staff by half. In another cost cutting move, Bird put its recently remodeled offices up for sublease last Fall.
In its pitch deck, the company says ridership has rebounded as much of the world emerges from strict lockdowns. Topline revenue increased 81% over the past month, though part of that reflects the seasonality of the e-scooter business with increased demand during warmer months of the year.
Bird touts an $800 billion market opportunity in micromobility in its pitch to potential investors, a more favorable regulatory environment post-COVID, more durable scooters, as well as consolidation in the industry. It also says it is valued relatively cheaply at 2.8 times 2023 projected revenue.
Formed in 2019, Switchback is led by co-CEOs Scott McNeill and Jim Mutrie, both former executives at RSP Permian, an oil and gas driller that was acquired by Concho Resources in 2018, which this year was acquired by ConocoPhillips.
Switchback merged with the electric vehicle charging company ChargePoint last year.
The Information reported in January that Bird was raising $100 million in convertible debt and has held discussions over the past few months with at least three special purpose acquisition companies (SPACs), including former Uber executive Emil Michael's DPCM Capital. Bloomberg first reported in November Bird was exploring the possibility of going public via a SPAC.
Founded by the brash former Uber executive Travis VanderZanden in 2017, Bird became the fastest company in history to reach unicorn status in 2018, a milestone that has become less rarified of late as startup valuations have soared ever higher.
Offering startups a quicker and less scrutinized route than traditional IPOs, SPACs became all the rage last year, with 248 companies going public through that route compared to 59 the year before, according to SPAC Analytics. There have already been 315 this year though recently the market appears to be cooling.
Retrospec, a Los Angeles-based ecommerce brand that sells outdoor recreation and fitness gear, is among the latest companies to enter the e-bike market. It will launch its first line on April 21st.
E-bikes have been on the rise lately, spurred in part by the pandemic and a desire for sustainable, outdoor transit.
Retrospec was founded in 2009 by Ely Khakshouri, who began selling bikes out of the back of a van as a student at USC. Over the past decade, Retrospec has expanded to include not just several types of bikes, but gear for skaters, paddle boarders, snowboarders and those looking to build a home gym.
Khakshouri told dot.LA that Retrospec always knew it would enter the e-bike market at some point, it just was a matter of timing.
"It feels like the demand is really there now," he said. "I think we're really highly regarded when it comes to urban cycling and everyday bikes. That's what — as much as many of us enjoy performance bikes and recreational riding — we focus on putting bikes out there that help people get from point A to point B. So, I think this is the biggest no-brainer of all time for us as a company."
Demand for several kinds of e-bikes has increased over the past year. Lime recently announced a $50 million expansion of its LimeBike fleet, thanks in part to an investment round led by Uber last May and the acquisition of Uber's bike-share system, Jump. The Pasadena-based delivery platform URB-E also recently raised a $5 million Series A round to expand its service, which uses high-performance bikes to cart around up to 800 pounds of cargo.
Retrospec's Jax folding e-bike
Retrospec's e-bikes will retail between $1,000 to $1,500, and are meant for personal use, ideal for the daily commuter who doesn't want to show up to events winded or sweaty, or who needs to travel further than one might on a standard bike. The idea of going farther is what Khakshouri believes has increased demand for e-bikes among personal riders.
"Whether you're going trail riding or just riding down the boardwalk by the beach, there's always this fear of, 'I have to get back.' I think having the e-bike gives you extra access, and takes that fear and pain away," he said.
Additionally, e-bikes can also help equalize group rides, Khakshouri noted. Riders who need an extra boost to finish a ride or catch up have that via pedal assist, which decreases resistance as the rider pedals, and a throttle, which can completely take over for a fatigued rider or when facing a steep hill. The bikes also have an "easy start" push button that helps riders get going.
"We try to keep things really simple where it doesn't feel like you're driving a complex machine," Khakshouri said. "All of our bikes have a simple, clean aesthetic and one that also is nostalgic of what bikes have always looked like and the history of bikes, so I think that's all going to come through our e-bike line and differentiate us."
Retrospec will start with two e-bike models. The Beaumont 7S Electric Bike can reach up to 20mph and last up to 15 to 25 miles, depending on the battery. It's a stylish option for city riding available in four colors, including soft pink, pale blue, eggshell and matte gray.
The Jax Folding Electric can also reach up to 20 mph and last up to 35 miles, depending on the battery. It has a more rugged design with a foldable frame and thicker tires, and comes in matte black or olive.While Retrospec is entering the e-bike market late in the pandemic and won't be able to gauge COVID-19's impact on demand for its e-bikes, the company did see an increased interest in their other products, from bikes to home fitness equipment over the last year. People who could no longer use their indoor gyms began looking for ways to exercise at home, and also experienced a renewed interest in outdoor activities. For many companies, including Retrospec, this demand ran up against supply chain issues, as Retrospec quickly sold out of products it couldn't immediately restock.
"A year later, we're still playing catch up," Khakshouri said. "What's cool about that is I think a lot of the used gear out there has gotten another turn. There's been a lot more upcycling that's gone on and that's obviously really good from a sustainability standpoint, too."
Retrospec's next move will be a literal one. It will leave the Vernon headquarters it's outgrown next month for a much larger space in the Inland Empire, and will also open an office in Los Angeles.
This story has been updated to reflect a change in the release date for Retrospec's line of e-bikes.
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In January 2020, just before the pandemic hit, Irvine-based electric bike manufacturer Super73 had just launched its newest bike models — the S2, R, and RX — and business was surging.
Then the pandemic hit.
"There was a day in March when [Gov. Gavin Newsom] declared a state of emergency, everything shut down, and we saw our sales drop quite a bit. We were like, 'uhhh, buckle up, what's coming?'" said co-founder and Chief Marketing Officer Michael Cannavo.
The prospect of customers sheltering at home and avoiding the outdoors and other people seemed like a death knell. In April, Lime laid off 13% of its staff, saying it had been forced to shut down 99% of its markets to support cities' social distancing measures.
"Then, the rest of the year, every single day was a record-breaking day," Cannavo said. "The biggest issue of 2020 was just trying to keep up with the demand."
As Los Angeles and the world emerges from the worst days of the pandemic, interest in electric bikes is surging, with several Southern California e-bike startups recently announcing new funding and expansions. The surge derives from several trends that emerged during the pandemic, including a rise in the popularity of bikes, a move toward clean transportation technology and the boom in ecommerce and deliveries.
Image courtesy of Super73
Earlier this month, Lime revealed it would spend $50 million on a large e-bike expansion, upgrading and quadrupling its LimeBike fleet, and adding service to 25 new cities in 2021.
The company raised $170 million in an investment round led by Uber in May, and has acquired Uber's bike-share system, Jump.
Lime, which launched as LimeBike in 2017, initially only offered e-bikes, but changed its name and pivoted to focus on electric scooters shortly thereafter.
Its bikes and scooters are considered last-mile solutions, giving people a convenient option for short, local trips, or an easy way to get from a train or bus station to their final destination. Lime's newest e-bike, slated to debut this summer, will come with a 350-watt motor and a swappable battery that works interchangeably with its electric scooters.
Electric bikes differ from traditional bikes in that they use a rechargeable battery to power a motor. While cyclists can still pedal an e-bike, the motor can help with difficult hills, long trips or, in some cases, heavy cargo.
Laws pertaining to e-bikes vary from city to city, but most are classified as bicycles and can use the same infrastructure, including lanes and bike racks, as their non-motorized counterparts. A 2019 study found that e-bikes offered an affordable alternative to owning a car, while still providing the exercise and recreational benefits of a traditional bike. Additionally, the widespread use of e-bikes could reduce C02 emissions, urban noise, air pollution and inner-city traffic.
According to Lime demand for e-bikes surged globally during the pandemic as people began to favor single-rider outdoor choices to public transit or rideshare services.
"Shared micromobility is playing an essential role in getting cities moving again safely so we see this as a critical moment to double down on e-bikes as an open-air, socially-distanced transportation option," Lime CEO Wayne Ting said in a statement.
Super73's Cannavo said he saw a similar surge in interest, coupled with a newfound sense of freedom and community.
"We had become a tool for people who were trapped in their houses," he said. They were buying our bikes as a source of joy and pleasure in a really uncertain time."
When Super73 went looking for funding in Silicon Valley in 2017, they didn't catch much interest. Investors were more interested in backing an app — such as Bird or Lime — than a new bike product. But now, Cannavo said it's clear that their bike's value "isn't a last-mile option as much as it's a lifestyle option."
The e-bikes retail for between $1,260 and $3,245 and are highly customizable, from their color schemes and handlebars to seating and battery placement.
Super73 owners have built a community around their bikes, regularly attending group rides and meetups in cities around the world. Cannavo said a typical event draws around 90 riders. About a third of U.S. Super73 owners and about half in Europe have completely ditched their car for the bike. This is common in urban areas and small towns, but even more so in cities like Paris or Amsterdam, where gas-powered vehicles are being phased out.
"It gives people who can't afford a car or want another option for transportation, or who just want something fun to get around on the weekends," Cannavo said. "You still get the thrills [of riding a bike], you're interacting with your city, and it really connects you more to your community which is why I think our group rides are so successful. Suddenly you're going down streets you've never gone before because your car could never take you there and you're finding the hidden gems within the city and that's because you got out of your car."
The company announced last month it had raised an additional $20 million from investors including Volition Capital, which it plans to use to develop new anti-theft technology as well as to grow its operations and diversify its supply chains. Cannavo said he also hopes to open more international showrooms on top of those in Irvine and Amsterdam.
Courtesy of Super73
Pasadena-based URB-E sees itself on the forefront of two recent trends. One is the push to transition to electric vehicles amid climate concerns. The other is the dramatic surge in demand for delivery services, something that was already on the rise before COVID-19 and which CEO Charles Jolley predicts won't slow down after the pandemic.
The company pivoted in 2019 from manufacturing foldable scooters into a delivery network powered by e-bikes. It also recently raised a $5 million Series A round and named Jolley, an Apple and Facebook veteran, its new CEO.
Consumers have become used to the convenience of delivery, Jolley said, and they aren't likely to let that go.
"Where a company like URB-E comes into play is that we think the next stage is to transition to where you're doing much higher density kinds of deliveries like groceries or parcels or food deliveries out of ghost kitchens. For all of those, you need much more efficiency than what you get out of a bike with a small package on it."
E-bikes, not cars or trucks, he said, offer the fastest, easiest way to transition to doing more deliveries in a way that's mindful of the climate.
"Replacing a five-ton truck with a five-ton electric truck that's just three tons of battery isn't feasible. We don't have enough lithium iron in the world to do that, so we have to come up with smarter solutions if we're going to make that transition," he said.
URB-E bikes are engineered by Chief Technical Officer Sven Etzelsberger, previously a lead engineer at Porsche, to be high-performance machines. They attach to a container that can carry up to 800 pounds of cargo, which riders can move through cities at 12 mph thanks to the bike's high torque.
"Our first application is mostly same-day delivery, but we're also doing parcel delivery with some companies," Jolley said. "So a big company might bring a truck to the edge of a neighborhood like Santa Monica, and inside the truck would be containers they could pull out to waiting bikes, who'd do the last-mile delivery."
URB-E will deploy this exact concept in Santa Monica and Downtown Los Angeles this year, and will also update the e-scooters it uses in Pasadena with e-bikes.
The startup doesn't compete with existing delivery providers but works with them. So, for example, a business could provide its own drivers to use URB-E's system, or a delivery provider that already works with a grocery store or retailer could rent URB-E's fleet and technology platform on an hourly basis. Those delivery companies would then save on equipment, maintenance and storage costs.
"It's really trying to make all of the infrastructure, technology, software and equipment just completely turnkey," Jolley said.
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