Micro-mobility or last mile connectivity is often looked at like a passing trend or as a transient alternative that could go out of style any day. However, there are companies proving that wrong every day with successful and sustainable business models. The e-scooter rental startup Circ is one such company that went against all odds and is counted amongst one of the fastest-growing micro-mobility startups. Also, in Jan 2019, the German startup raised a large Series A funding round of €55 million.
Boris Mittermüller is the COO of Circ and Remco Janssen, owner and founder, Silicon Canals recently met him to know more about the micro-mobility segment, and what more can we expect from the company in 2019 and beyond. Boris started off by rounding up some of the factors that are making micro-mobility and last-mile connectivity grow by leaps and bounds.
The first thing being the demand as the customer uptake is quite high. He said, “Circ registered 1 million rides in 132 days and 3 million rides just after 192 days.”
As per Mittermüller, “the typical number for a company is about 1 million rides in 200 days. Circ is touted to be the fastest-growing micro-mobility company in the world.” The tech behemoth reportedly registered 10,000 rides after 200 days.
More fun than public transport and cheaper than owning a car
Mittermüller notes, “It’s no doubt that public transportation is flat out cheaper as compared to last-mile connectivity solutions. However, when compared to owning a car, owning or sharing an e-scooter seems to be more sustainable and less resource demanding. Additionally, it is faster, more efficient and more fun way to navigate around a city. He quotes, “the company’s customers have a willingness to pay, which is why Circ is growing by the day.”
Overcoming drawbacks
While the proposition of e-scooters for last-mile connectivity might seem great, it also has its drawbacks. One can’t go grocery shopping with it and can’t carry extra luggage, as you would with a car. It is not surprising that most e-scooters and last-mile mobility options of today cover only limited use cases. There are such scenarios and use cases that are not covered by the company, yet.
New generation of Circ e-scooters in the making
The primary use case in micro-mobility right now is said to be transporting a person from point A to point B. It can also be the last mile connectivity solution for some other form of connectivity. Another use case could be vehicles that are a better fit for particular weather conditions, and also enable transportation of small goods.
There are also scenarios where two people want to travel together. Mittermüller confirms that “Circ is indeed working on all these scenarios already and over the next 12 to 18 months, we will get to see a new generation of shared electric vehicles and they’ll change the way people move in the city.”
The concept of multi-modality
As mentioned, there are varying use cases of last-mile connectivity. However, integrating the front-end and some certain functionalities of the backend makes sense. For example, a user can arrive at the train station and already have an e-scooter booked to cover the last mile from the train station to their office or vice-versa.
Circ has implemented this in Zurich, Switzerland and is working on a similar partnership in all the countries it operates. The company is also working on making it’s well maintained and charged electric scooters easily accessible in areas like train stations.
“I think it’s something that is good for people because they will use different means of transportation to get from A to B,” says Mittermüller.
More players or few players, with consolidation?
While competition is necessary, Boris believes that it doesn’t make sense in this segment from the customer’s perspective. One wouldn’t want to install a bunch of apps from different service providers in a city. In addition, an operator needs to have a certain critical size in order to operate a fleet that is not only well maintained but also well placed in the city.
Bigger fleet size equals higher utilisation
Boris believes that there’s a fundamental change happening at the moment, in the way people move within cities. There needs to be a solution and Circ is working on creating a tentative solution to public transportation and more.
However, its success depends a lot on two major factors ie. availability and reliability. Boris explains, “When I talk about availability it means, how many scooters are available within walking distance of five minutes and then reliability is, when will you get a scooter, is it well maintained? Is there enough battery charge left to let you complete your trip? All of these things will affect a business.”
As per Mittermüller, “the bigger your fleet size, the higher the utilisation of your fleet will be. One needs to achieve a certain scale and then there’s the need for capital.”
High investments, yet sustainable business
The e-scooter business requires a lot of capital. The initial e-scooters used by the company had a very short lifetime of about two to three months, while the current Circ scooters (their own first generation of vehicles) have a lifespan of roughly eight to twelve months, which is still a relatively short period. At a certain point, the fleet needs to be refreshed and this makes it not only a very fast-growing business but also a capital consuming business.
While the unit economics of the business are sustainable and profitable, the company will need more money to design the next generation of scooters.
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