Driven by a Mission
In 2017, the streets of many large cities across the world suddenly changed. Fast-growing shared electric scooter (e-scooter) startups such as Lime and Bird started deploying fleets. These new micro-mobility startups quickly attracted customers — especially around ages 18 to 34 — that valued being able to able ride a few miles without having to use a car or carry a bike.
This disruption didn’t come without controversy. E-scooters are causing an increasing number of accidents. Their use is now regulated across the country, and some cities are even banning them. The situation could be better on the business side, too. Most e-scooter companies are still unprofitable, even those earning hundreds of millions of dollars in revenue like Lime or Bird.
Emil Nnani, co-founder and CEO of Boaz Bikes, a seated e-scooter sharing company serving low-income neighborhoods, told me he can solve these issues and open new markets. Most e-scooter companies are only operating in the richer and most touristy parts of cities. As a result, residents of lower-income neighborhoods often do not have access to these services. According to Emil, competitors avoid these districts because of a higher risk of scooter theft and degradation.
But Boaz Bikes is different. Its mission is to provide seated e-scooters to these populations and increase their access to last-mile transportation. Boaz Bikes has a strategy to reduce the risk. Its co-founders connect with the community leaders in every new location. They also make sure to meet the locals and offer them gift cards to try the e-scooters. By creating a relationship with local communities, Boaz Bikes reduces the chance of misbehavior toward its products.
Riding Lean
When I first talked with Emil in early 2022, his company already had better metrics than most of its competitors. In 2021, Boaz Bikes was profitable and had no reported accidents over its first 200,000 rides. Back then, it was a small startup with good potential. Now, its growth is what matters.
In 2022, the company grew its revenue by 30% to reach $750,000. But the company’s growth has been pretty slow so far. Fortunately, Boaz Bikes runs lean and doesn’t need much funding to support its operations. Its proprietary software helps the team manage its contractors and use its vehicles efficiently. The scrappiness also comes from the teams’ salaries. Only Emil is full-time, and his salary is lower than the median salary for a Bird employee.
Boaz Bikes could easily keep sustaining itself as a small business. It would not go bankrupt — but it would not bring returns to investors either. Still, it’s good to know that Boaz Bikes can survive. As long as it does, it can focus on growth at some point, increase its valuation, and find an opportunity to exit.
Boaz Bikes is also diversifying its business model. It currently charges riders $0.39 per minute on every ride. The company is running a weekly rental pilot in Dallas to test longer rental periods. If the results are successful, Boaz Bikes will start renting out part of its fleet at $39 per week. That way, clients could avoid the hustle of grabbing a shared scooter for each ride. This could be a new revenue source for Boaz Bikes. Weekly rentals earn about 50% less money than offering e-scooters through a shared fleet model. But it will help maintain steady revenue and reduce the need for contractors to move the company’s e-scooters around the city.
All of these changes are reflected by the rating for Boaz Bikes’ latest funding round. In 2021, the company’s raise was rated a low 1.2 out of five, and it received a Neutral Deal report. In early 2022, the rating grew to 3.3. Boaz Bikes’ current StartEngine raise is 4.7. One big change particularly increased the company’s score since its last raise and helped it rank amongst the top-rated companies — the company adjusted its valuation.
Back in early 2022, Boaz Bikes’s valuation was $50 million. It was clearly overvalued. The valuation is now adjusted to $19.5 million. While it still gives the company a high revenue-to-valuation multiple of 26x, it is a better opportunity for investors today than during the company’s last raise.
The Future Is Expensive
Emil and his team mostly executed on the plans he shared with us in his Founder Profile from early 2022 (though these promises differ somewhat from the milestones Boaz Bikes’ presented to investors in 2021). His vision for 2023 and beyond is pretty clear.
Boaz Bikes will use its current StartEngine raise to add 4,000 vehicles to its fleet (currently 1,500 scooters strong). The company will first expand to Los Angeles, where it is already approved by regulators, before focusing its growth on the Californian market. It will deploy 2,500 e-scooters in the Los Angeles area. Knowing that each scooter brings $350 every month to the company, Boaz Bikes could potentially make up to $875,000 per month in Los Angeles. This would grow the company’s revenue rapidly.
I like the plan, but investors should be careful with these ambitious goals. With the $140,426 from Boaz Bikes’ current StartEngine raise (as of this writing), the company cannot buy more than 250 e-scooters. And raising funds is the only way for this capital-intensive startup to grow.
Boaz Bike’s vision goes way further than Los Angeles, of course. But as an investor, I want to see the team succeed with its next step before aiming for higher growth.
Overall, I like what Boaz Bikes has achieved, and I am reassured to know that the company has the recipe for profitability. I believe that the company’s strategy and its ability to deploy e-scooters in low-income neighborhoods is an advantage that competitors could find difficult to replicate. Still, even if Boaz Bikes has the potential to grow, its growth is restricted by its capital and its ability to buy new bikes. I know that the team has some serious leads to get new access to capital and finally experience exponential growth — which is good news. Without that, it will be close to impossible for Boaz Bikes to grow the company further.
