Investors seem to love putting capital into start-up electric scooter businesses, but why is that? With a great flair for recognizing good ideas, it’s obvious that this industry is one that will thrive in the future as investors wouldn’t have paid attention to it otherwise. Undeniably, there has been criticism floating in the air as well, so there’s no denying the fact that not all are equally pleased with the scooters popping up all over in big cities. Some journalists described the latest invasion in San Francisco as downright terrorizing as while a more convenient manner to get around the city is presented, it did come with major repercussions as the streets were littered with the scooters.
How it works
In the case of start-up companies that focus on rentals, the whole procedure works by the user calling up a specific app to find a scooter in his/her proximity and unlock it. As the user’s session ends, the scooter is left and locked anywhere for the next person to pick it up, which has led to quite the unpleasant situation in the past, but there is a quick fix to this issue through user education provided by the companies that offer the service. It was foreseeable that the Eco-friendly commute and transportation alternative to cars and public transportation would amass a massive following, especially considering the fact that it costs anywhere from 15 cents to $1 per minute to rent the scooters, which is very affordable.
Why a lot of capital is necessary for the implementation
Capital is necessary for domestic and international expansion, and all start-ups that have ventured in the electric scooter industry require a lot of it to properly penetrate in existing cities and launch into new geographies. Investors see putting their money in these start-ups to aid their development as a smart move as the initial reception was an immensely positive one, statistically speaking the growth of the phenomenon leading to higher profits for those who have taken the initial risk.
What exactly drew the attention of investors?
Evidently, the potential profits are what convinced investors to give this industry a shot, but profits would not have been achievable without an appealing product or service, to begin with. Regardless if we are talking about the rental services provided by certain companies or by the production and distribution of electric scooters for personal use, there are quite a hefty amount of perks that have put this industry in the spotlight.
- Environmentally friendly: As the worldwide concern regarding pollution grows and people are more aware of how big of an impact their vehicles have on air quality, an increasingly positive reception is seen in alternative transportation means that tackle the issues regarding fumes release and the spreading of other pollutants into the air. Electric scooters are among these Eco-friendly alternatives as no fumes or pollutants are released into the air, meaning that they are perfectly safe for the environment.
- Travel versatility: As convenient as cars and traditional public transportation might be, there is quite a wide range of limitations they are faced with, especially in big cities where people have to take massive detours in order to reach certain destinations and where traffic congestion presents a nuisance at almost any moment of the day. This isn’t an issue of worry with electric scooters, however, as their compact size allows the rider to drive on narrow streets easily, and even create their own shortcuts to avoid congestion if it is in their regular path at that moment.
- Low maintenance: Even after a large period of constant use, the scooter doesn’t require much in the way of maintenance. Sure, as time passes, some parts will require replacement, but their costs aren’t all that high as opposed to the costs involved with changing car parts, for example. For investors who have taken an interest in the rental business, this is a great perk as there will be small losses on maintenance, which automatically implies bigger profits in the long run.
- Affordability: The aspect of affordability is one that investors put a lot of emphasis on as the manufacturing process of the electric vehicles is a cheap one. Thus, successful marketing is bound to lead to huge profits as affordability is witnessed both in the manufacturing process and in the maintenance department as we previously explained.
Challenges that investors have acknowledged
Like with all marketplaces, there are some challenges along the road, and investors are aware of this fact. However, seeing how big money is still going in the industry, it might mean that these specialists see the risks as considerably smaller than the benefits to be reaped if everything proves to be successful. There have been a few incidents that sparked negative attention as well, but these are isolated occurrences that won’t affect public opinion especially if a fix will be provided. The major concern from this point of view is the fact that this is a new market, one that hasn’t made its presence felt worldwide yet. When the moment comes to make that giant leap and start manufacturing and delivering products to more countries all over the globe, a potential unforeseeably negative reception in major areas of interest would lead to smaller profit gains. What should be done when implementing the industry in new places is to meet the demand with an appropriate supply and not get overzealous by producing more than necessary.
Prevalence and what it shows about the future
The rental services provided by companies like Bird, Lime, and Spin among others, made headlines, so it was obvious that the interest of investors would spark, but few saw this big of an outcome when it comes to investments to ever land. Domestically, the prevalence of scooter services offered by Bird amasses to approximately 40 cities, while international expansion has already reached France and Israel in the case of this specific start-up. With proper backing and smart decisions along the way, not only will we all benefit from this transport alternative that can be quite delightful and provide those who don’t have an electric scooter of their own to more conveniently get from one place to another in the crowded city they live in, but issues like air pollution produced by cars and similar transportation means and heavy traffic will be fixed as well.