Transportation

LimeBike, the cycle-sharing startup, expands to Europe as it hits 1M rides in the US

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LimeBike, one of the many startups hoping to steal a march in the crowded bike-sharing market, is today taking its first step to scale internationally. The Bay Area-based company — which lets people use an app to find and ride “dockless” bikes for $1 for 30 minutes (or $0.50 for students) and then leave them parked on sidewalks for future customers to use — is expanding to Europe, with a launch of 500 bikes each in Frankfurt, Germany and Zurich, Switzerland.

Rides will be charged at either 1 Swiss franc or 1 euro for 30 minutes, the company said.

The move comes two months after LimeBike raised $50 million in funding on what we have heard was a $225 million valuation, and some decent growth in a competitive market. LimeBike, as of this weekend, passed 1 million total rides, with more than 10,000 riders each day using LimeBike’s distinctive green cycles across some 30 cities. (Founded by Adam Zhang, Brad Bao, Charlie Gao, and Toby Sun, LimeBike has raised $62 million to date.)

But it’s a very long, and uphill, ride for bike-sharing companies, which have to some extent been following the Uber/Lyft model for growth: raising outsized amounts of money to build out operations across a wide number of markets, and running those operations at very competitive, potentially subsidised-to-stay-cheap, prices to develop regular customers.

To put LimeBike’s financials into some perspective, Ofo and Mobike, two of the bigger players out of China — where there are several more bike sharing startups already competing — earlier this year respectively raised over $700 million and $600 million. Both companies are valued between $2 billion and $3 billion, and are using their coffers to expand aggressively into LimeBike’s backyard.

LimeBike itself is not sitting still, either. The company said that this month it is its fleet in the US to 50,000 bikes, up from its current size of 10,000, to meet demand, along with a ramp up of servicing staff, and an app update to provide better parking and riding guidance.

The company said that it’s choosing Frankfurt and Zurich because they are both bike-friendly cities that have existing populations that match LimeBike’s demographics of young professionals and students.

“Frankfurt is the financial capital of continental Europe and hosts some of the most important fairs of international business and trade,” said LimeBike’s VP marketing, Caen Contee, in an emailed interview. “It is also the world’s most sustainable city, according to the Sustainable Cities Index. It is a vibrant city full of young professionals and students with one of the most diverse demographic structures in all of Germany. In other words, it is the perfect city to launch LimeBike and test the responsiveness of Europe to the dockless bike sharing concept. Zurich is another great spot to launch a dockless bike sharing concept. The Zurich people love to ride bikes and Switzerland has the second highest density of bicycles per population (behind the Netherlands).”

The plan will be to use the two cities as a starting point for a wider rollout in Europe. “We are working closely with cities to get a deep understanding of  the German, Swiss and generally European markets, which will be paving the way for future expansion into other cities in Europe,” he added.

The contrast between bike-sharing companies raising outsized rounds and those that are finding it hard to do the same has resulted in a number of casualties, and with the privately backed outfits often also competing against schemes underwritten by cities themselves, it makes for a tricky market.

On the positive side, unlike ridesharing startups, bike startups do not have the larger issue of maintaining two-sided marketplaces, since the passengers of their bikes are, in fact, the drivers. On the other hand, they also have a different cost model. The Ubers of the world generally do not own the vehicles in their fleets, but the bike companies not only own their cycles but have to have a fleet of people on hand ready to service and maintain them.

LimeBike itself claims that its model is not a risky or hard-to-sustain one. “One ride per bike per day allows for a sustainable business model,” Contee said.

For now, on a purely selfish consumer level, the profusion of bike-sharing companies is translating into an interesting opportunity for people living in dense urban areas, giving many choices to those who may be looking for alternatives to private vehicles, public transportation and walking; and for investors and the transport industry to see if this model has what it takes to keep up momentum and keep moving.

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