As countries come out of lockdown and people go back to work, governments around the world have been keen to get people back to work safely. This itself has put fuel in the fire of an already rapidly growing industry, Micro-Mobility.
Worldwide, the micro-mobility market has seen $5.7 billion invested since 2015. This has spawned hundreds of scale up’s worldwide which in turn has given rise to the age-old question, how do you fund these high-growth companies while minimising dilution?
Over the past few months, Fuse Capital has been working with a multitude of Micro-Mobility scale-ups in Europe, helping to deliver them debt funding and get options on the table. So I sat down with our head of lending and co-founder Russell Lerman to get the insider’s point of view of funding micro-mobility.
What type of businesses have Fuse Capital funded in the micro mobility sector?
“We’ve mainly worked with local e-mobility companies. They are all about inner city replacements for public transport. Typically these are sit on scooters, stand on scooters and Ebikes. Most importantly these companies own these assets.”
How many companies in the micro mobility sector have you worked with?
“So far we have worked with 4 micro mobility companies, we have 3 of the biggest e-scooter companies in Europe and we also have 1 in the US.”
What are the funding options for these companies?
“Fundamentally, we’ve taken “old world” finance with different forms of leasing and applied it to new world business models and assets. 1-2 years ago this wouldn’t be possible because the “old world” finance was only just getting comfortable with the assets and business models of these new players in the market” he said.
“As they’ve got comfortable we’ve applied their old world finance to these new business models which in turn has become a really cheap way to finance this. On top of this, they’ve also taken growth finance and applied it to these businesses as well.”
What were the deal sizes?
“The deal sizes have ranged from $5m to $50m. We can effectively fund the value of their assets and fleet.”
What are the challenges of funding Micro-mobility?
“There are quite a few challenges. First of all, lenders need to get used to the business model in terms of having assets being left out in the street, the residual value and the lifetime of the assets. They also need to get comfortable with the fact that most of these companies are loss-making as they scale and in terms of applying their own finance to it.”
“There are also difficulties around local governments and municipalities as they try to regulate the use of micro-mobility there will be winners and losers in terms of where you are allowed to operate.”
“As you can see there are a wide range of challenges and they can go down to some very odd quirks, but every single challenge we’ve been thrown, we have found a solution. There is nobody out there who has been funding these companies for 5-10-15 years, because they didn’t exist back then. We are here at the beginning of a tech revolution and we already have a proven track record of delivering funding for these companies.”
The market is quite small and young at the moment but we’ve worked with a large percentage of the micro mobility market and we already have a history of delivering debt finance to these companies. There are a lot of challenges with this type of funding but Fuse Capital has the experience to deal with them.
If you are a micro-mobility company and would like to schedule a meeting with Russell, feel free to get in touch today.