Bird, a startup that rents out electric scooters, is being valued at $2.5 billion in a new funding round led by CDPQ and Sequoia Capital, the company announced at TechCrunch Disrupt on Thursday. The company says it raised $275 million in its Series D round, which it claims is a testament to the company’s effort to improve its unit economics.
Bird’s new pre-money valuation was first reported earlier this summer by TechCrunch and The New York Times. It’s a slight increase over the company’s $2.3 billion valuation from last year, but it’s still a sign that venture capital firms aren’t done pumping money into e-scooter companies, despite reports of steep cash losses and rampant vandalism of the scooters. But the temperature around scooter sharing has definitely cooled down: Bird raised $418 million in financing last year.
That may have something to do with grim reports that emerged earlier this year about the financial instability of scooter sharing. Bird lost nearly $100 million during the first quarter of 2019, while revenue shrank sharply to only about $15 million, according to The Information. In the spring, the scooter startup was down to about $100 million left in cash.
Bird says it’s been able to woo investors, thanks to its renewed emphasis on unit economics. That’s how much revenue each individual scooter brings in for the company. One of the most important numbers to consider is the lifespan of each scooter. The more trips and miles a single scooter can cover, the better it is for scooter companies that have to recoup the cost of each vehicle before they can start making money.
But reports suggested that electric scooters were breaking down before the companies were even able to recoup their costs. Last year, Quartz published an analysis based on numbers provided by the city of Louisville, Kentucky, that found the average lifespan of a scooter to be 28.8 days. Early models purchased off the shelf from Chinese manufacturers were breaking down under heavy fleet use, spurring the companies to design newer, better scooters.
Bird CEO Travis VanderZanden told The Verge last March that each scooter needed to stay in service for six months for the company to break even. Since then, the company has rolled out not one, but two new scooters: Bird One in May and Bird Two in August. Both scooters, the company says, are designed to be more durable and longer-lasting. Bird One has an average lifespan of 15 months, while Bird Two has not been widely distributed yet.
“Nearly a year ago, we recognized that the world was changing,” VanderZanden said in a statement. “Gone are the days when top line growth was the leading KPI for emerging companies. Positive unit economics is the new goal line. As a result, we pivoted from growth to unit economics as the top priority for the company.”
According to sources familiar with the company, the new funding will be used to chart a clear path to profitability as well as continued vehicle research and development, which Bird believes is a contributing factor to positive unit economics.