Silicon Valley scooter startup Bird bet big on Paris and lost to rivals. Insiders are betting on consolidation.

Bird scooters parked LA

Electric scooter unicorn Bird lost tender processes to run scooter rentals in two key European cities: Paris and Lyon.
Bird has raised more than $600 million to date, but its growth has been complicated by the emergence of copycat rivals, the coronavirus, and regulators limiting the number of scooter operators in their cities.
The loss of Paris is a major setback for the company in Europe, and if rivals continue to win tender processes in other cities, Bird may be forced to buy its way to victory.
"Consolidation through M&A is the only path forward in the industry," former Lime executive Noa Khamallah said. "I expect investors to back Bird on M&A but they need to be on the ground in key markets."
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In July 2019, Bird CEO Travis VanderZanden visited Paris and announced the electric scooter company could bring 1,000 jobs to the French capital.

VanderZanden stated at the time that the Santa Monica-based startup would make Paris its "second home."

The startup had been operating in Paris since 2018, and Bird executive Patrick Studener said at the time that Paris and France more broadly were key markets for the company.

Their ebullience was understandable.

Bird had raised $418 million in venture capital and was about to hit a $2.5 billion valuation.

It was primed to dominate the emerging electric scooter market, just as Uber had created and dominated the ride hailing market. VanderZanden himself previously been a growth exec at Uber and his new company was borrowing many of his old employer's tactics.

But a year on, Bird has been booted from its "second home." Industry sources say it may be forced to acquire one or several of its rivals to try and bolster market share.

Bird lost tender processes in the French cities of Paris and Lyon within the space of a few months in 2020

Like other parts of the economy, Bird's business has been badly impacted by the coronavirus, and the company has laid off hundreds of staff. It halted operations in six US cities as well as 21 European markets, including Barcelona, Berlin, Munich, and Paris in response to the virus.

As VanderZanden made his remarks last summer, Paris authorities simultaneously decided that the chaos caused by the 12 different scooter operators renting out vehicles on its streets needed to be curbed.

The city announced a tender process to allow just three companies to operate rentals. In late July, Business Insider revealed that Bird had lost the tender to its rivals Lime, Tier, and Dott.

It was a setback, given Paris is the gateway for US scooter companies into Europe.

"Paris is the Valhalla of mobility," Noa Khamallah, a former executive at Lime and Voi and now senior vice president and cofounder at scooter charging startup Charge, told Business Insider. "It's the number one European market for micro-mobility with the most trips per vehicle and the most revenue, now the city is also widening bike lanes and reducing car traffic."

Traditionally, London would be the first key European market for any US startup looking to expand onto the continent. But until very recently, the UK has been a no-go zone for electric scooters thanks to draconian laws banning them from public streets and pavements.

One former Bird employee in Europe, who wished to remain anonymous, told Business Insider that "Paris was Bird's number one target in Europe and [it] had always fixated on the continent's most lucrative market."

Bird declined to comment but a source close to the company admitted that the decision was a disappointment for the startup. Paris alone, with its 5,000 scooters, won't make or break the company but the failure was hard to take.

Another sore loss, after pouring serious resource into Paris, was the Lyon tender process. Lyon announced on July 31 that two smaller European rivals to Bird, Dott and Tier, had won its tender process.

"The loss in Paris hurts a bit yes, but add Lyon on top of that and it puts Bird in a tough spot versus Lime, they operate in the same markets and now Lime has an advantage," Charge's Khamallah said.

Bird may need to strengthen its presence through acquisitions

Bird still has a strong presence on the continent, and can boast a victory over its rivals as the only scooter operator to be running a scheme in London. It also won a tender to operate in the French city of Marseille in October.

Still, other cities will hold tender processes — such as Rome and Amsterdam — and the results from France suggest Bird's arsenal of cash may not be that much help in the lobbying process.

In just three years since founding, US companies Bird and Lime have raised $623 million and $925 million respectively while smaller, newer European competitors Tier and Voi have raised $131 million and $168 million each, per Crunchbase.

"Consolidation through M&A is the only path forward in the industry," Khamallah said. "I expect investors to back Bird on M&A but they need to be on the ground in key markets."

Bird declined to comment on possible acquisitions.

One possible option could be to attempt to buy one of the European competitors who won in Paris.

Uber-backed Lime is off the table, but a move for Dott or Tier is more likely. Bird declined to comment on potential acquisitions and a company source indicated a move was not currently on the table.

Bird has form, having bought European company Circ for an undisclosed fee in January 2020.

Paul Asel, managing partner at NGP Capital and an investor in Lime, previously told Business Insider that Paris' decision to limit operator numbers would likely set the stage for only two or three companies operating in Europe going forward.

It might be one way to put Bird's fundraising to good use.

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