- Electric scooter-sharing company Bird has raised $400 million in four months to cover the streets and sidewalks of America with scooters.
- Plenty of people in Silicon Valley have been scratching their heads over the $2 billion valuation that Bird has gained in a year since founding.
- We asked investors at Sequoia Capital and other VC firms why they backed Bird of all the scooter startups — and how they justify the $2 billion price tag.
- VCs said they believe in Bird's CEO, a former Uber exec, because he invented the scooter-sharing market and has the experience to scale the business.
After hearing about Bird through his connections at Uber, where Bird's founder and CEO previously helped scale the ride-hailing giant, Jordan Nof, an investment partner at Tusk Ventures, flew to Santa Monica, California, to convince Bird to take his money.
In their offices, he remembers seeing a chart that mapped the number of people using Bird and the total number of trips taken — two lines that curved "drastically up and to the right." Since Bird rolled out the first electric scooters in Santa Monica last November, the company has added "more zeroes after those numbers," Nof said.
"Genius is the only way I would describe it," Nof said of Bird's business model. "It has the opportunity to fundamentally change the way people get from point A to point B."
Tech investors are flocking to Bird, the scooter-sharing company that's raised $400 million in four months. It's been less than a year since Bird launched, and already the startup was rumored to be seeking a $2 billion valuation in the last funding round.
Bird lets people reserve a local scooter on their phone, ride for a small fee, and at the end of the journey, leave the scooter wherever to be claimed by the next rider.
The company has deployed vehicles across 11 neighborhoods and cities in California, Texas, and Washington, DC. It's currently banned in San Francisco, along with all the other scooter sharing startups, as the city works out a permit system for the scooter companies.
As an avalanche of venture dollars pours into Bird and its rivals, namely Lime, plenty of people in Silicon Valley are scratching their heads over the sky-high valuation.
In a blog post explaining his Bird investment on Thursday, venture capitalist Mark Suster, a partner at Upfront Ventures, said, "No company has ever elicited so many questions by friends, colleagues, entrepreneurs, fellow VCs, and journalists as has Bird."
So we asked investors at Sequoia Capital, Tusk Ventures, and Greycroft Ventures why they backed Bird of all the scooter startups — and how they justify the $2 billion price tag.
If you ain't first, you're last
According to investors and Bird founder and CEO Travis VanderZanden, a former executive at Uber and Lyft, Bird invented the electric scooter-sharing industry.
When Bird launched the first scooters in its hometown of Santa Monica last fall, its competitors — Spin, LimeBike, and Ofo — were still focused on bike-sharing. They added scooters to the inventory in 2018, and LimeBike later rebranded as Lime.
Dana Settle, a founding partner at Greycroft, said when evaluating companies in the same space for a possible investment, her firm always considers who had the original idea.
Roelof Botha, a partner at Sequoia, which led Bird's newly announced $300 million Series C funding round, said being first places Bird one step ahead of the competition.
"If you're the one who invented it, you've probably thought about the problem many layers deep," Botha said of Bird. "That's the thing with people who copycat — they copy what the see today. But they don't know what you've been thinking. They don't know the next move that you intend. How you've already mapped out the next several months or the next several quarters of product innovations and nuances."
It leaves the competition "playing catch-up," he added.
Massive growth with zero spending on Facebook ads
Settle became aware of Bird when she started seeing the sleek electric scooters buzzing around Los Angeles, where she runs Greycroft's west coast office.
"It was sort of overnight in Santa Monica," Settle said. "The adoption we saw, it was palpable."
In less than 10 months, Bird built a brand that users love. The company has seen explosive growth in app downloads and usage, according to investors, and it's managed this success without spending a dollar on Facebook ads or billboards.
"They've built a brand that people are already using as a verb," Settle said.
Botha looked at several scooter companies before investing in Bird. He said Bird had the most users and the best user retention, which means "once people try it, they love it."
The other Travis
Several investors agreed that Bird could be the next Uber or Lyft because of "the magnitude of the market opportunity and the magnitude of the problem."
Bird provides what's called a "last-mile" solution. Customer might use cars or public transportation to get most of the way to their destination, then hitch a scooter for the last mile — a part of the journey that's notoriously difficult to reach or slow from traffic.
Anyone who walks is a potential customer. And as more people move into cities, which they are, it's important they be able to get around quickly and easily to reduce congestion, cut down on car usage, and improve mobility for all.
"Something that you think about whenever you're writing investment memos is how big is the market. ... It's like, are they going to replace walking? That's ridiculous. Now it's like, no, that's not ridiculous," said Nof, whose firm Tusk invested in the Series A.
Investors said a big reason why they invested is because of Bird's founder.
Beyond being the other high-ranking executive named Travis at Uber, VanderZanden also held the distinction of having worked at both Uber and Lyft. At Uber, he led the company's international growth before being tasked with growing the pool of drivers.
Nearly two dozen employees flew the coop from Uber or Lyft to join Bird, according to their accounts on LinkedIn. (Bird looks to be launching in Las Vegas next, as the company just hired a former brand ambassador for Uber who's based in the city.)
Investors said these Uber and Lyft defectors will learn from the mistakes of the ride-hailing industry and apply best practices to make Bird the leader in scooter-sharing.
But is Bird really worth $2 billion?
The biggest criticism leveled against Bird is that it's overvalued and overhyped.
Bird said in a state regulatory filing that it was raising new funding that could value the company at $2 billion, Axios reported. Investors would not confirm the valuation.
It's a hefty price tag for a company that currently operates in mostly coastal cities where the weather allows for riding scooters year-round and the locals wear t-shirts and hoodies to work. As Bird scales to new areas, men in suits and women in business attire might not want to take a scooter to a business meeting or even to dinner with friends.
Investors told Business Insider that only people who have seen Bird's growth numbers can understand the rare opportunity at hand — and that valuation.
"Do you remember how silly that Instagram acquisition was? Oh, God. Facebook totally overpaid for that, didn't they?" Botha said, his voice dripping with sarcasm.
"Do you remember YouTube, when everybody laughed at Google for paying $1.6 billion for the company? 'Gee, how silly.' Or when eBay paid $1.5 billion for PayPal, which is now worth $100 billion. It's human nature — saying that something that wasn't there yesterday is now something — for people to question it," Botha said.
"People who say that don't have the facts," he said.
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