(Bloomberg) -- Uber Technologies Inc. is leading an investment round of $170 million in scooter-rental company Lime, a lifeline for a startup reeling from plunging customer numbers and companywide layoffs.
Alphabet Inc., GV and Bain Capital Ventures, along with other new and existing stakeholders, also participated, Lime said in a statement on Thursday. As part of the deal, Lime will acquire Uber’s Jump bike-sharing business operations and the two companies will expand the integration of their mobile apps.
Lime also replaced its chief executive office, co-founder Brad Bao, with Wayne Ting, previously the company’s head of operations. Before joining Lime, Ting worked at Uber, including a stint as chief of staff for Uber Chief Executive Officer Dara Khosrowshahi.
Ting’s elevation, along with the new investment, could bring Uber and Lime closer together. As the deal was being negotiated, Lime executives gave it the codename “Unity.” Uber was already an investor in Lime, but also ran its own competing micromobility operation. “Uber is exiting the market and really making a bet on Lime,” said Ting.
With the new investment, Lime is valued at about $510 million, people familiar with the terms said, asking not to be identified because the terms are private. That’s a massive drop from the $2.4 billion investors priced the company at in a funding round last year. Lime didn’t comment on the valuation.
Venture capitalists have invested more than $1 billion in the last few years in two startups renting electric scooters -- Lime and Bird -- but they began falling out of favor this year. First unprofitable business models fell out of fashion, and then the pandemic kept customers stuck at home. Both companies had to drastically reduce their fleets by mid-March.
Read more: Scooter Companies Pull Out of Cities Worldwide Amid Pandemic
Lime said in January it was cutting 14% of staff, about 100 employees, and retreating from a dozen markets in a drive toward profitability. In March it said it was “winding down or pausing” service in all markets but South Korea. And in April, further job cuts were announced. Ting said he doesn’t anticipate further terminations, in part because the infusion of capital will allow it to weather a situation that may prove to be daunting for the foreseeable future.
Global self-isolation measures and government bans on travel had decimated Lime’s ability to generate revenue from the hundreds of thousands of scooters it has around the world. The company went from 147,000 scooter trips globally on March 14 to about 52,000 three days later as Europe went into lockdown.
Scooter companies are also suffering from a sharp decline in transportation spending and a newfound aversion to the sharing economy. This combination of factors is also weighing heavily on Airbnb Inc., Lyft Inc. and Uber. Lyft said Wednesday that it’s cutting 17% of its workforce.
But cities are also closing off streets to automobile traffic, a trend that micromobility advocates hope will become permanent. Lime has begun to operate in about two-dozen cities, though with smaller fleets and a focus on essential workers. Ting said that Lime expects to be profitable as soon as next year.
Local officials “are signaling to the world that we need to look at new ways to move around,” he said. He anticipates commuters eventually flocking to forms of transportation that don’t require them to be in enclosed spaces with large crowds. “They’re looking for a socially-distanced, friendly way to move around the city.”
(Updates with more information on Ting starting in third paragraph.)
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