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How the pandemic has reshaped investments in micromobility

Before the COVID-19 pandemic, investments in the shared micromobility industry have climbed in line with growth in ridership and usage. From 2015 to 2019, nearly $7 billion was invested in this market. Funding contracted sharply in 2020, to around $800 million, but the industry is now returning to its growth trajectory, as we predicted in a previous article, and capital flows are also increasing. In 2021, micromobility players attracted around $2.9 billion in new investment, and they could surpass that level in 2022. But capital flows are now coming from different types of investors, and they’re going to regions and types of vehicles different from those of the past. .

To better understand these differences, we used McKinsey’s Micromobility Investment Database, which applies big data algorithms to track publicly disclosed investments in companies that provide shared micromobility services or produce vehicles and technology. support for the shared micromobility industry.1 The tool can analyze investments by investor and by type of vehicle – for example, e-kickscooters, electric bicycles and electric mopeds – as well as by geographical areas. It focuses on investing in companies in key micromobility markets in Asia, Europe and North America.

A regional move to Europe

Since 2018, approximately $8.4 billion has been invested in micromobility ventures across the top three markets, split relatively evenly between Asia ($3.1 billion, or 37%), North America North ($2.9 billion, 34%) and Europe ($2.4 billion, 29%). ) (Part 1).

Europe is overtaking Asia in terms of investment in micromobility.
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To determine whether funding patterns have changed over time, we segmented total investment by looking at two time periods: the years before the pandemic (2018 to 2019) and the three years after (2020 to 2022). Our analysis shows that the flows of funds have not been evenly distributed in recent years and that Europe has taken precedence over Asia. Investments in micromobility companies headquartered in Europe represented only 12% of global flows before the pandemic, but almost 50% from 2020 to 2022. Investments in North American companies have also increased during the second period. Asia has seen the largest decline in funding over time: from $2.7 billion (60% of the total) to just $400 million (10%).

One of the reasons for this change may be the accelerated measures (such as the construction of urban lanes dedicated to bicycles and scooters) that European policymakers have used to make micromobility safer and more attractive. Additionally, many European players have grown extremely rapidly in recent years and are buying up smaller competitors, fueling continued investment.

Electric scooters remain the most common type of vehicle

Around the world, companies that focused on shared electric scooters attracted the most investment – $5.2 billion – from 2018 to 2022, followed by bicycles at $3 billion and mopeds at $200 million. dollars (both including electric deals). Since the start of the pandemic, the share of investments devoted to e-kickscooters has increased and now stands at almost 90%. This concentrated flow likely results from the continued consolidation of e-scooter vendors as market leaders acquire smaller players (Figure 2).

Around 90% of investment in micromobility now goes to e-kickscooters.
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The breakdown of investments by region and vehicle type shows that electric scooters attracted 98% of total funding in North America and 86% in Europe from 2018 to 2022. In contrast, in Asia, bicycles attracted the most funding. investments, i.e. more than 80% of the total.

Another idea emerged from an in-depth analysis of investments in companies that focus on providing support services for shared micromobility rather than offering the shared services on their own. The analysis focused on start-ups that provide services related to parking, charging, fleet management, maintenance and relocation. Prior to the pandemic, investors had provided around $100 million in funding to these companies in China, Europe and North America. That number more than tripled between 2020 and 2022, when it hit nearly $350 million. Much of this increase is in parking and charging solutions, which accounted for almost half of total investments, compared to only around 10% before the pandemic. This strong growth may have occurred because it has become increasingly clear that efficient parking and charging infrastructure can reduce both operating costs and vehicle idle time. These benefits are particularly important for self-service shared micromobility fleets.

Institutional investors continue to dominate the market

Investors fall into three main categories:

  • institutional investors, including banks, venture capitalists and private equity firms
  • OEMs (including those for micromobility) and suppliers
  • mobility service providers

From 2018 to 2022, institutional investors provided approximately $7.7 billion in micromobility funding, or 92% of the total $8.4 billion received. Mobility service providers accounted for about $500 million in funding, or 6%, and OEMs, about $2,070 million, or 2% (Figure 3).

Institutional investors still provide the bulk of micromobility financing.
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In the wake of the pandemic, institutional investors still account for the largest share of capital, but the gap has narrowed and the amount they invest has shrunk in absolute terms: they accounted for around $4.2 billion of funding from 2018 to 2019, but only $3.4 billion from 2020 to 2022. For the same periods, the amount invested by mobility players has almost tripled, from $140 million to $390 million. dollars.

Several trends help explain the shift in investment. Before the pandemic, many venture capitalists invested in immature micromobility players, likely because they saw the potential in this nascent market. More recently, major shared mobility players have stepped up their efforts to access the micromobility segment through mergers and acquisitions, thereby increasing their share of investment. Additionally, existing micromobility players are investing more funds in their businesses as they expand into new cities or are doubling their investments in new vehicle platforms or customer segments in the cities where they currently operate. .

Institutional investors still preferred e-bike companies in 2018, allocating around 72% of their funding to this segment. Their preferences started to change in 2019, however, when the buzz around e-kickscooters started to pick up. The share of institutional investments in this segment has increased from around 60% in 2019 to almost 90% in 2021. Electric mopeds have received only minor interest from institutional investors over the years.

McKinsey data shows investment patterns in micromobility have changed since the pandemic, with more funding now flowing into Europe and electric scooters. Institutional investors continue to provide the most funding, but their share has declined. The micromobility segment will continue to evolve rapidly and we will continue to follow the evolution. Stay tuned.

1. The database aggregates information from Crunchbase, Pitchbook, corporate websites and major media outlets.

Kersten Heineke is a partner in the McKinsey office in Frankfurt, where Benedikt Kloss is an associated partner; Darius Scurtu is a solutions partner in the Munich office; and Timo Moller is a partner in the Cologne office.

The authors would like to thank Angela Ruan for her contributions to this article.

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