The consequences of mergers and purchases of companies in the electric scooters sector are beginning to emerge. The coronavirus health crisis has put a business’s accounts in check that, before the virus, was hanging by a thread. Large maintenance expenses that were not offset by the income of the platforms, which also had the weight of large investments and valuations.
In this way, last January – just before the virus changed the world – the company dance began. Even during the pandemic some of the most unexpected announcements occurred. MyGo was surrendering to an American giant, Wheels. Bird, another of the main protagonists of this battle, announced the purchase of Circ at the beginning of the year. And just a few weeks ago, as a result of a million-dollar round of financing in Lime, Uber gave up its entire scooter business under the Jump brand to who, at another time, was its rival.
Now the American giant Bird is reorganizing the business he inherited from Circ, at least in the Middle East. Almost 10,000 scooters have been removed from the streets in what the company poses as a reorganization of its now-larger business. His idea is to avoid the hottest months in the region by taking advantage of changing his fleet. Although the reality is that the 100 employees who operated for the company in the area have also lost their jobs.
Circ’s scooters are now traveling to a company for recycling despite sources at Techcrunch saying that several European companies – including Tier – had been interested in purchasing second-hand scooters. Bird would have rejected all the offers on the table, despite the fact that almost 1,000 of the recalled models were brand new.
Bird organizing the chaos of Circ
Circ’s story, and its subsequent sale to Bird, shook the foundations of the scooter business.
Based in Germany, the company soon became a giant and a company capable of planting itself against Silicon Valley rivals. The technological one soon grew in Asia and mainly in Europe. In fact, in Spain he managed to reach the meritorious company position with more scooters deployed on the streets.
But not everything was so beautiful in the German success. Circ, formerly known as GoFlash, had raised $ 50 million in private investment. With them they grew and bought their rivals, Koko – the Zaragoza startup dedicated to the sector – was one of their acquisitions. The millions soon ran out and mismanagement and controversy within the company emerged.
The company ended up going on sale with a loss of 100 million euros. Bird, who at that time was looking to grow in Europe and Asia, saw the opportunity in the market after the purchase of Scoot.
Now, and with the temporary closure of the Middle East added to the Covid-19 crisis, it will be seen how successful Bird’s strategy is.
The widespread problem of electric scooters
The union of companies in the scooter sector responds to the sector’s own evolution. Born most of them in the warm climates of California, they knew little or nothing of the cold winters outside their region. Nor of how the sector would respond in a half space of time. In fact, most of them waited expectantly to see what their first full year of life was like.
In general, the responses have been uneven and more so with the arrival of the Covid-19. But the reality is that the evolution of the sector parallels that of the Chinese bicycles of a few years ago. Moment in which several Asian companies landed in Europe with their bike models that users did not end up liking. In a few months these were abandoned and the companies abandoned the business.
Now scooters are facing something similar and the Covid-19 it is partly to blame that the tech companies are retreating, leaving behind a trail of bikes and scooters.