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5 Qs WITH A DEALMAKER

Good morning, Term Sheet readers.

Another day, another massive e-scooter funding round.

E-scooter startup Lime announced yesterday that it has raised a whopping $310 million in Series D funding at a $2.4 billion valuation. Bain Capital Ventures, Andreessen Horowitz, Fidelity Ventures, GV, and IVP led the round.

Lime, which began as a bike-share company, has deployed its scooters and bikes in more than 100 cities in the U.S. and 27 international cities. The startup boasts more than 10 million sign-ups and 34 million+ trips.

Lime will use the fresh funding to expand into new markets, improve its technology, and hire more people. “We will also continue investing in two critical areas: rider safety and city collaboration,” reads a Lime blog post.

In light of the news, I spoke with Sarah Smith, the partner at Bain Capital Ventures who co-led the Lime round. Smith joined the firm in May to focus on early-stage investments across consumer technologies and marketplaces. Ironically, her second deal was a Series D round investment.

“I expect the majority of my investments to be Series A, but if I see something unusual, as was the case with Lime, we might pursue something later-stage,” she told Term Sheet.

I spoke with Smith about the Lime investment, scooter regulation, and the future of transportation. Below is an excerpt of our conversation of five questions (and one follow-up). Read the full Q&A here.

TERM SHEET: Out of all the players in the e-scooter space, why did you decide to invest in Lime?

SMITH: Over 2018, it was clear there was this almost vertical consumer demand curve happening with adoption of scooters and e-bikes. If you look at the ridership and usage, it is the fastest consumer adoption of any technology I’ve ever seen.

So late last year, we asked ourselves, “Is this something we would even consider?” Because it’s pretty outside the scope of traditional things that Bain has done. We did a deep dive into the industry, and met nearly every player in the micro-mobility space in a matter of several weeks. Once we had a point of view on what mattered, we decided whether it’s something that’s investable right now in a time horizon that makes sense. It became obvious to us that Lime was the clear winner for us from an investing standpoint.

Can you explain why?

SMITH: There are a few key things we think about when looking at a company like this. Certainly a lot of people focus on hardware and supply chain, and while we think that’s important for safety and the longevity of the vehicle, we believe that you have to assume that at some point most companies at any scale will get to parity in terms of their capabilities. That said, Lime certainly has a strong supply chain capability internally, and we felt we were ahead from most players on hardware. But that’s not the crux of the thesis on why we chose to invest.

Another area to look at is around utilization, which is how many trips per vehicle per day can you get? So you have this vehicle sitting in the middle of Atlanta, and you ask yourself: How can I get the most trips per day because that’s where the most of my revenue will come from.

What you really need to have is a really strong set of data to help you determine where you should be placing this vehicle in the morning and throughout the day. Do you need to re-balance them? How can you create incentives within your network of local contractors who can help re-balance the location of those scooters? Interestingly, 40% of trips come from or to a public transit station, which makes sense, because it’s the last mile. So how do you take advantage of that and make sure that you don’t have a vehicle stuck in a dead zone for too long? If you have the most experience, the most markets, the most data — you will be better equipped to run a large-scale operation effectively in many different types of markets.

The other interesting component of this is government regulation. This type of solution could really alleviate a lot of traffic congestion, but the challenge for cities is managing vendors, managing safety, and making sure the scooters are being parked in the right place. Governments can do everything from having a “hard cap” and say you can only have 500 scooters per vendors. They can do no cap, which could mean a flooding of the streets. Or they can do “dynamic capping,” which is where we believe the industry is going. We think most cities will have three to six vendors, and the way to regulate how many vehicles to have on the road is through dynamic capping. They’ll watch the trip per vehicle per day on average per vendor, and if it dips below a certain amount, they’ll make them pull them back.

In that way, cities and operators can better manage the marketplace to make sure there are enough scooters for consumers and that they are in the right places at the right times. When we called municipalities, they had really positive feedback about Lime and how they had worked with cities to shape these policies, and that gave us a lot of confidence to invest.

When ride-sharing emerged, pioneers like Uber took an aggressive approach with cities. Some scooter companies have attempted a similar strategy, but a number of municipalities have cracked down with restrictions and bans. Will the ride-sharing approach work in this sector?

SMITH: Certainly it’s different in that it’s a physical piece of hardware sitting on the street, so unlike a driver turning off the app, a city could literally impound the scooter. Because of that, it has to be a very different type of relationship. With that said, I think both industry players and municipalities have learned a lot from ride-sharing over the last number of years. It’s a big reason why Lime has been proactive in working with cities first to try and help shape the policies because this is something that will take a lot of cooperation between the city officials and the operators.

I do think it has to be a city-first approach, but at the end of the day, it feels inevitable that every major market will have scooters because cities feel pressured from constituents to figure it out.

But do you think it’s realistic to expect cities that don’t have the proper infrastructure to support scooters in a meaningful way?

SMITH: They may not have dedicated bike lanes, but most cities do have at least some paths where bicycles are being used. Anywhere a bike could go successfully, a scooter can go successfully.

What about seasonality? Scooters are great in California, but what happens on the East Coast where we have a polar vortex every other week?

SMITH: We certainly see a dip in usage because of seasonality. What’s interesting is that it looks like precipitation is actually more of a damper to usage than temperature. If you think about it, if it’s really cold outside, you’d rather get somewhere faster than walking slowly. If I’m in windy Chicago and I could get somewhere five minutes faster, I’d do that. But rain and snow are actually bigger factors than temperature.

Here’s the thing: Scooters have literally been on the road for less than a year. We are now only getting through our first winter, and if you think about product development in general, this is V1 of winter. We’ve learned a lot this winter that will probably make us dramatically better during next year’s winter.

What do you think transportation looks like 10 years from now?

SMITH: I think we’re going to be in a much more streamlined, multi-modal world. I think we will be able to have apps and services that stitch together to get you from Point A to Point B in the fastest, most fuel-efficient, environmentally-friendly way possible. Every minute of every day, I should be able to open an app and know exactly which modes of transportation I’d be taking.

In 10 years, it’s not crazy to think that most 16-year-olds will not be getting their driver’s licenses. It’ll be like riding a horse — some people will continue to do it, but most people will never need to learn. If you live in a remote area — similar to if you live somewhere where it makes sense for you to learn how to ride a horse — then you would do that. But if you live anywhere with any kind of urban density — even the suburbs — you probably will not need to learn how to drive the car. It’ll all be autonomous vehicles, which is fantastic because it opens up the world to a whole lot of people who can’t be mobile right now because of the simple fact that they can’t drive.

Read the full Q&A here.

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VENTURE DEALS

• Tink, a Sweden-based open banking platform, raised €56 million ($63.5 million) in funding. Insight Venture Partners led the round, and was joined by investors including Sunstone, SEB, Nordea Ventures and ABN AMRO Digital Impact Fund.

• vArmour, a Mountain View, Calif.-based provider of API-driven cloud security, raised $44 million in Series E funding. AllegisCyber and NightDragon led the round.

• Gong.io, a conversation intelligence platform for sales teams, raised $40 million in Series B funding. Battery Ventures led the round, and was joined by investors including Norwest Venture Partners, Shlomo Kramer, Wing Venture Capital, NextWorld Capital, and Cisco Investments.

• Rebag, a platform for buying and selling luxury handbags, raised $25 million in Series C funding. Novator led the round, and was joined by investors including General Catalyst and FJ Labs.

• Cluno, a Germany-based startup providing a “car subscription” service, raised $28 million in Series B funding. Valar Ventures led the round, and was joined by investors including Acton Capital Partners and Atlantic Labs.

• Jetty, a New York City-based home rental startup, raised $25 million in Series B funding. Keith Rabois of Khosla Ventures led the round, and was joined by investors including Valar Ventures and Ribbit Capital.

• Mattermost, a messaging platform for engineering teams at large organizations, raised $20 million Series A funding. Redpoint Ventures led the round, and was joined by investors including with participation by S28 Capital and Y Combinator.

• ChartIQ, a financial technology company that develops financial software, raised $17.4 million in Series B funding. Digital+ Partners led the round.

• Zoovu, an artificial intelligence digital sales assistant platform, raised $14 million in Series B funding. Target Global and Beringea co-led the round.

• Bink, a U.K.-based payment-linked loyalty business, raised £10 million ($12.9 million) in funding. Barclays led the round.

• Vantage Point Logistics, a Columbus, Ohio-based provider of healthcare supply chain technology solutions, raised $9.5 million in funding. Investors include Radian Capital and Tamarind Hill.

• Centage Corporation, a provider of cloud-based budgeting, forecasting, analytics and reporting solutions, raised $8.5 million in Series C funding. TVC Capital led the round.

• Crayon, a Boston-based market and competitive intelligence company, raised $6 million in funding. Bedrock Capital led the round.

• DataSine, a London-based AI startup that helps businesses personalize their communications at scale, raised $5.2 million in Series A funding. Pentech and Propel Venture Partners led the round, and were joined by investors including C.Entrepreneurs/Cathay Innovation, Twin Ventures and Sistema_VC.

• Inventys, a Canada-based carbon technology company, raised $5 million from BDC’s cleantech practice as well as a follow-on investment from Chevron Technology Ventures.

• Embleema, a New York-based healthcare blockchain network for secure sharing of personal health records, raised $3.7 million in Series A funding. Pharmagest and Techstars led the round.

• Netography, a San Francisco-based autonomous network security platform, raised $2.6 million in seed funding from Andreessen Horowitz.

• Outlaw Inc, a New York-based modern contract platform, raised $2 million in seed funding. Bowery Capital led the round.

• Flashbreak, a Paris-based mobile quiz game app, raised $2 million in seed funding. Investors include Alven and Kima Ventures.

PRIVATE EQUITY DEALS

• Topix, which is backed by New Mountain Capital, acquired ClarityRx, a Newbury Park, California-based provider of skincare products. Financial terms weren't disclosed.

• Equity38 LLC made an investment in TRX, a provider of functional training solutions. No financial terms were disclosed.

• Access Private Capital and NexPoint invested $11.5 million in VineBrook Homes, a provider of quality rental homes.

• Weld North Education, which is backed by Silver Lake, agreed to acquire Glynlyon Inc, a Rock Rapids, Iowa-based digital curriculum company. Financial terms weren't disclosed. The seller was Linsalata Capital Partners.

• L Catterton made an investment in Grupo MYT, a designer and operator of restaurant brands in Mexico. Financial terms weren't disclosed.

• L Catterton invested more than $20 million in Hydrow by CREW, a live outdoor reality rower.

• Abry Partners recapitalized Sermo, a social platform for physicians and largest healthcare professional survey company. Financial terms weren't disclosed.

• Platinum Equity acquired Pro-Mark, the parent company of irrigation products providers Orbit Irrigation and Hydro-Rain. Financial terms weren't disclosed.

• Boyne Capital acquired Adapt Laser Systems, a Kansas City, Mo.-based provider of laser cleaning solutions. Financial terms weren't disclosed.

• EduLab Capital Partners invested in eCare Vault, a Boston-based provider of document management, care team collaboration and service tracking platform for special education and healthcare. Financial terms weren't disclosed.

• BlueCross BlueShield Venture Partners invested in Ideal Option, a provider of Medication-Assisted Treatment and behavioral counseling services for individuals suffering from Opioid Use Disorder. Financial terms weren't disclosed.

• Traditions Health, a portfolio company of Dorilton Capital, acquired Hospice Connection, a Texas-based provider of hospice services. Financial terms weren't disclosed.

OTHER DEALS

• Viome agreed to acquire Habit, a personalized nutrition company, from Campbell Soup Company (NYSE: CPB). Financial terms weren't disclosed.

IPOs

• Stealth BioTherapeutics, a Newton, Mass.-based Phase 3 biotech developing therapies for mitochondrial diseases, says it plans to raise $81 million (74% insider) in an offering of 6.2 million ADSs priced between $12 to $14. The firm posted loss of $70.1 million in the nine months ending Sept. 2018. Morningside Venture backs the firm. Jefferies, Evercore ISI, and BMO Capital Markets are underwriters. It plans to list on the Nasdaq as “MITO.” Read more.

EXITS

• Procter & Gamble acquired This is L, a San Francisco-based period care startup that manufactures organic pads and tampons, for approximately $100 million. The company had raised approximately $120,000 in venture funding from investors including Fusion Fund, Winklevoss Capital, Y Combinator, and 7Percent Ventures.

• Acacia Partners sold Perennials & Sutherland, a Dallas-based designer and manufacturer of 100 percent solution-dyed acrylic performance fabric and rugs for indoor and outdoor use. The buyer was Bertram Capital.

• Airgas, a subsidiary of Air Liquide, agreed to acquire Tech Air, a distributor of industrial gases and welding supplies serving various geographies in the U.S. The seller was CI Capital Partners. Financial terms weren't disclosed.

• BV Investment Partners will acquire Intelliteach, an Atlanta-based provider of tech enabled, business process outsourcing solutions for law and accounting firms, from Dominus Capital, L.P. Financial terms weren't disclosed.

• TCV made a $200 million investment in Relex Solutions, a Finland-based provider of unified retail planning solutions.