Learnings from a B2C IPO – Bird

Bird (the scooter company) went public in October via a SPAC. We just got around to reviewing their prospectus, and it’s a doozy. Learnings are below.

What they do. “In partnership with cities, Bird’s proprietary technology and operations are revolutionizing the existing transportation paradigm by making lightweight electric vehicles readily available to rent or own around the world.” They were the first to the scooter market.

Started in 2017, and exploded. “Since our first shared ride in 2017, we have facilitated over 100 million trips on Bird vehicles through our Sharing business. Today, Bird offers riders an on-demand, affordable, and cleaner alternative for their short-range mobility needs in over 350 cities worldwide, and we are only getting started.”

They raised $800mm through the Series D. The market cap today is $2bln, which means some investors lost some serious money.

The company uses local fleet managers. “Fleet Managers typically manage logistics for fleets of 100 or more Bird-owned vehicles in their local markets, driving meaningful scale on a hyper-local level. With the support of our central operations team and advanced technology platform, Fleet Managers manage the day-to-day logistics responsibilities required for proper fleet management, including deploying, repairing, rebalancing, and sanitizing Bird vehicles.” Prior to Q2 2020, it was all in-house. “As of September 30, 2021, 97% of our in-market operations, excluding Bird Platform, were supported by Fleet Managers.” It’s unclear whether Fleet Managers stick around. Below Bird shows only 6 months of retention. Losing 22% of anything after 6 months isnt great.

Covid crushed rides. Rides went from 40mm in 2019 to 18mm in 2020. Rides per vehicle went from 2.5 to 1.3. Rides are seasonal. “We typically experience higher levels of activity in the second and third quarters as a result of improved weather conditions in the Northern Hemisphere and lower levels of activity in the first and fourth quarters as conditions worsen.”

Unit economics aren’t great. The business only generated a gross profit in the last 9 months of the year. The presentation below which removes depreciation in an attempt to show more profitability is non-sensical.

Apollo is their lender, meaning Bird couldn’t get money from a less aggressive lender. “Our multi-year track record of vehicle retention and revenue generation from over 100 million global rides allowed us to finance our vehicle purchases with asset-level debt, and in April 2021, we secured a $40 million asset financing credit facility from Apollo Investment Corporation and MidCap Financial Trust (each managed or advised by Apollo Capital Management, L.P. or its affiliates).”

Real lessons. Bird is as an interesting case study for venture. The business has largely been uneconomical while it grew (doesn’t generate gross profit), but only became economical when it shrank materially. VC stuffed this company with cash, overvalued it, and got lucky with an “exit” via SPAC that valued the business far below prior rounds. This is a tough way to get to an IPO, investors ultimately lost a lot of money, and I have a feeling the founders would do things a little differently if they could.

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