Micro-mobility, which includes electric scooters and bike-sharing platforms, has been a big focus in Europe's startup scene. With cities dealing with traffic and pollution, these solutions offer a new way for people to get around that's both convenient and eco-friendly.

In the late 2010s, micro-mobility started gaining attention as a solution to urban transportation issues in Europe. Startups offering shared electric bikes, scooters, and other options attracted a lot of investment and grew quickly. Over the last decade, both the mobility and micro-mobility sectors in Europe saw a lot of growth and investment, with many new companies entering the market. Electric bikes, scooters, and mopeds became common sights in major cities, thanks to a surge in funding from venture capitalists.

But in 2023, things started to change. Many startups faced challenges that tested their business models, partly because of broader economic factors and problems specific to each company. This period of turmoil revealed weaknesses in the micro-mobility business model, affecting much of the sector. Looking into the events from 2023 to 2024 sheds light on what's in store for European micro-mobility and what it could mean for the industry as a whole.

State of European Mobility Startups in 2023

In 2023, the European mobility startup scene had its ups and downs. Despite a 26% drop in VC investment compared to the previous year, totaling $9 billion according to the 2023 European Mobility Report of Dealroom.co, there were still signs of promise, especially in early-stage funding rounds like Series A, which remained strong and hinted at ongoing investor interest.

A noteworthy trend in 2023 was the rise of infrastructure-heavy EV battery and charging startups, which snagged more than half of the total mobility funding. However, alongside these developments, the once-booming micro-mobility sector faced its fair share of difficulties.

After a decade of growth, the micro-mobility industry hit rough waters in 2023 and 2024. Economic uncertainties and tighter access to funding made it tough for many operators. As a result, the sector saw a wave of challenges, leading to notable bankruptcies across the region.

A Recap of Recent Events

Given these circumstances, it's crucial to examine the key events that unfolded during this tumultuous time to gain a better grasp of the industry's dynamics.

• On July 18, 2023, VanMoof, once celebrated as the "most funded e-bike company," declared bankruptcy in the Netherlands, with administrators now evaluating options for a possible restart, including asset sales to third parties.

• Berlin-based e-scooter startup Unu, known for its stylish e-scooters and efforts to promote electric mobility, filed for bankruptcy on November 24, 2023.

• German micromobility company Tier announced layoffs of 22% of its workforce on November 28, 2023, amidst challenges in the micromobility market.

• Bird, once one of the fastest startups to reach a $1 billion valuation, filed for bankruptcy on December 20, 2023, highlighting the inherent difficulties in the shared micromobility sector.

• European scooter startups Tier and Dott merged in a €150m deal on January 10, 2024, targeting profitability by 2024 amid industry turmoil and bankruptcies.

• Cake, the Swedish e-motorcycle startup, filed for bankruptcy on February 1, 2024, after facing financial difficulties despite previous funding.

• Voi Technology, a Swedish electric scooter startup, laid off 120 employees, about 12% of its workforce, on February 16, 2024, amidst challenging times for the micromobility sector.

• On February 21, 2024, Cityscoot, the Parisian electric moped provider, was acquired by Spanish competitor Cooltra for €400k after filing for insolvency in November.

• Amsterdam's Felyx merged with Spanish company Cooltra on March 5, 2024, to strengthen its position in the Netherlands and Belgium, facing challenges in gaining market share.

• Norwegian startup Surf Beyond acquired bankrupt US-based scooter company Superpedestrian's European operations for €5m on March 12, 2024, to expand its presence in Europe.

• Finnish mobility startup MaaS Global, creator of the Whim travel app, filed for bankruptcy on March 14, 2024, despite raising over €160m from investors, reflecting broader challenges in the mobility startup sector.

• On April 18, 2024, Rotterdam-based umob acquired MaaS Global, integrating its technology, including the Whim app, into its platform to offer integrated transportation solutions across Europe.

As the micro-mobility industry in Europe grapples with a turbulent period, startups are encountering a host of challenges. Bankruptcies, staff layoffs, and company mergers are becoming increasingly common, casting the sector into a state of uncertainty. This begs the question: What lies at the root of this upheaval?

Underlying Factors

Intense Competition

The micro-mobility sector in Europe has seen a surge in startups offering electric scooters, bikes, and other shared mobility solutions, especially in cities like Paris and Berlin. This intense competition has led to aggressive pricing and high marketing expenses, resulting in unsustainable economics. For instance, Voi, Lime, and Tier have fiercely competed for dominance in major European cities.

Rising Interest Rates and Financial Strain

The rise in interest rates, fueled by central banks' efforts to tackle inflation, has significantly impacted micro-mobility startups. Higher borrowing costs have made it difficult for startups to secure working capital and fund their operations, exacerbating financial strain. Moreover, the drying up of debt financing options has left many with limited resources to sustain their fleets and cover operational expenses.

Financial Strains

Many micro-mobility startups face financial strains due to high operating costs and limited revenue streams. The capital-intensive nature of the business, coupled with the COVID-19 pandemic's impact, has further strained financial resources. Lockdowns and restrictions led to a sharp decline in ridership and revenue, adding to the financial burden.

Supply Chain Disruptions

Disruptions in global supply chains have also posed challenges for micro-mobility startups. Difficulty and increased costs in procuring essential parts and components for fleet maintenance have led to extended downtime for vehicles, escalating maintenance expenses and reducing service reliability.

Regulatory Hurdles

Regulatory hurdles, including varying regulations across European countries, have complicated operations and increased operational expenses for micro-mobility companies. Compliance with different rules across borders has led to additional costs and uncertainties, potentially jeopardizing profitability in the long term.

Impact of COVID-19

The COVID-19 pandemic further exacerbated the challenges faced by micro-mobility startups, with lockdowns and travel restrictions leading to a decrease in demand for shared mobility services. This decline in ridership and revenue has significantly impacted the sector, particularly in cities like Barcelona and Milan.

Aggressive expansion

Many startups pursued aggressive expansion strategies without achieving sufficient scale and revenue to become profitable. These companies focused on rapid growth fueled by speculative projections, underestimating regulatory hurdles, and user adoption challenges. With funding environments becoming more stringent, many startups struggled to survive on their reserves.

Consolidation as a Survival Strategy

In response to these challenges, consolidation has emerged as a survival strategy for many micro-mobility startups. Mergers and acquisitions allow companies to pool resources, reduce costs, and gain a stronger market position. For example, the merger between Dott and Tier aimed to achieve economies of scale and improve profitability amidst a competitive market environment.

Outlook on the Future of Mobility

The future of mobility holds immense potential to transform urban landscapes, improve air quality, and foster community engagement. However, various challenges must be addressed to ensure a greener, more affordable, and sustainable transportation ecosystem.

Immediate Challenges

Inflation and economic instability cloud the immediate future, posing profitability challenges with elevated costs. Smaller operators seek stability through mergers and acquisitions, but integrating corporate cultures and retaining talent bring risks. Prudent management during difficult periods strengthens resilience.

Longer-Term Prospects

Regulations, adoption barriers, and fleet reliability impact long-term prospects. Enhancing infrastructure, integrating micro-mobility into urban planning, and addressing these challenges boost growth and sustainability.

Collaboration for Success

Partnerships among startups, investors, authorities, and traditional industries are crucial. Combined mobility services provide diversified income streams, ensuring stability. Collaboration enables effective problem-solving, accelerating the growth of sustainable mobility solutions.

The European micro-mobility sector encountered difficulties with bankruptcies, layoffs, and consolidation. Intense competition, financial strains, supply chain disruptions, regulations, and reduced demand due to the pandemic contributed to the challenges.

However, by implementing effective management and collaboration, and focusing on long-term prospects, micro-mobility has the potential to revolutionize urban transportation, improve air quality, and establish sustainable mobility ecosystems. Overcoming immediate challenges and forming partnerships will pave the way for a greener, more affordable, and more efficient future of mobility in Europe.