Micromobility startups are following the lead of EV companies going public via mergers with special purpose acquisition companies, a financial instrument that came back en vogue in 2020.
Bird Rides, the California-born micromobility company that now operates in more than 100 cities across the United States, Europe and the Middle East, plans to merge with Dallas-based blank-check company Switchback II Corporation, reports dot.LA. Switchback, the blank-check company merging with Bird, was formed in 2019 and led by former executives at oil and gas driller RSP Permian, Scott McNeill and Jim Mutrie.
Bird is the second scooter company this year to eschew the traditional IPO path and instead opt for the trendy SPAC tool. In February, Helbiz, a micromobilty startup in Europe and USA, also became a public company via SPAC in a merger with GreenVision Acquisition Corp. Many micromobility companies saw ridership fall during the pandemic last year, so we might expect to see more go the SPAC route in order have access to capital quickly, without the time or expense of a traditional IPO process.
Bird has not responded to a request for comment.
At the start of 2020, Bird was valued at $2.85 billion. It has had its struggles, particularly during the pandemic when revenue dropped to $95 million in 2020, a 37% decrease from the previous year, according to the pitch deck viewed by dot.LA. In 2020, Bird laid off 406 employees, or about 30% of its workforce, to cut costs.
The impending transaction valued the company at $2.3 billion below its valuation last year, according to the pitch deck. With this merger, Bird will have access to cash, which the company will likely use to pay off its debts and fund its European expansion in a push for profitability. Last month, the company announced intentions to spend $150 million to double its European operations by expanding to 50 new cities.
The pitch deck reveals a number of other financial and ridership details. For instance, Bird expects to achieve profitability by 2023 after trimming this year’s losses to $96 million and next year’s to $28 million. It would also need to make $815 million in revenue in 2023 to be profitable, and the company expects to make $188 million this year.
“The financials included in the slides reveal a company quickly burning through the $1.1 billion of cash it has raised since 2017, with a $226 million adjusted EBITA loss in 2019 and a $183 million loss last year,” writes dot.LA.
The pitch deck also shows ridership rebounds after the lockdown, with an 81% increase in topline revenue over the past month, but much of that could be attributed to springtime weather.
Bird is one of the three cities that recently won a permit to operate in New York City’s pilot e-scooter program in the Bronx, a win that might be contributing to the company’s future prospects, even as it lost bids for Paris, Chicago and San Francisco. As more cities are creating a favorable regulatory environment for shared micromobility, better hardware continues to emerge and the industry further consolidates, making high growth an achievable possibility for the company.
Bloomberg first reported Bird’s conversations with Credit Suisse to go SPAC in November last year, and according to The Information, Bird has been raising $100 million in convertible debt from its existing investors, debt that could be converted into stock, but the company hasn’t confirmed the deal yet.