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October 19, 2018
THE BIG BIRD RACE

Good morning. Polina is off today and will return next week. In place of this morning's essay is a brand-new report by Lucinda Shen on the rise of electric scooter chargers—the people behind the multibillion-dollar business. A version of it appears in Fortune's November issue, which you can buy on newsstands beginning next week. Have a great weekend. (For questions about today's deals, write to jen.wieczner@fortune.com)

Around four o'clock in the afternoon, well before the sun begins to set on the seaside city of Santa Monica, Mark Devlin hits the streets in search of electric scooters on life support. The wireless, dockless devices are wildly popular here, propped up on seemingly every corner of town in bright red, pink, black, or green. But humans must take them off-line to charge them. By late afternoon, there are usually a few here and there that have fallen below a functioning battery threshold. So Devlin goes hunting.

 
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"You have to watch the Birds, see where they go, and see where they have congregated," Devlin, 57, says. "Then I strategize what my night is going to look like."

The real action starts after sundown. Many of the scooters, provided by at least four companies including Bird, Lime, Lyft, and Uber, deactivate at 9 p.m., when the services shut down for the night. So at 8 p.m., Devlin parks the U-Haul truck he rents for the occasion next to the largest flock he can find—to "preclaim them," he says—and waits.

At the stroke of nine, Devlin kicks into gear. He homes in on a flock of Birds using the app on his mobile phone, tosses each one into his truck, and makes his way to the next location—only to find that another charger (or "Juicer," as they're known for Lime) has seized the spoils. No sweat; Devlin moves on. At another scooter gathering, Devlin sprints, successfully claiming one mere seconds before another charger. By 10 o'clock, streets once flush with scooters are swept clean.

Devlin, by day a stage designer for rock acts like Metallica and Judas Priest, makes about $200 to $300 a night (at $5 to $20 per scooter), picking up between 40 and 60 scooters for recharging as part of Bird and Lime's bounty system for retrieval. The nightly gig helps pay the bills for his family of four and allows him to be his own boss. "I'm actually making more money doing this than what my chosen job is willing to pay," he says. "The instant gratification—it gets addictive."

Without a garage at home, Devlin charges scooters in his living room, half of which has been converted into a charging station. His wife doesn't love the new decor, but "she really likes what picking up 60 Birds is doing to my body," Devlin says with a chuckle. (Each scooter weighs 20 pounds or more.) Twelve hours later, he's back on the street to deposit his catch at an official drop spot—a "Bird Nest."

Hundreds of millions of dollars raised, billions of dollars in value—to say that the humble electric scooter has taken Silicon Valley and its sister to the south, Silicon Beach, by storm is an understatement. Santa Monica has authorized 2,000 motorized scooters as part of a new pilot program to solve the "last mile" of local journeys; San Francisco has green-lit 2,500 as part of its own effort. And e-scooters are appearing in cities across the nation including Atlanta, Baltimore, Denver, Detroit, Indianapolis, Miami, and St. Louis.

The logistics companies behind these electric scooters are valued like software startups, but many rely heavily on hardware and an army of independent contractors like Devlin to maintain their fleet. Without the help of freelance workers, some of these billion dollar businesses would fold. But the job, if not the entire business, is still in its infancy, and its effects on the local community remain to be seen. Under cover of night, scooter chargers compete with one another in a gamified gig for which the rules are hazy at best.

Some scooter chargers have faced violence. Devlin, for example, says he called the police after he was physically and verbally assaulted by a fellow charger who believed Devlin was gaming the system. Deedee Deschanel, a 29-year-old video producer, wears a bulletproof vest stocked with pepper spray when he goes Bird hunting on Saturday nights in Santa Monica. "You never know," he says.

And for women like Brooke Thompson, who goes out at night, often alone, with a minivan to pick up scooters in the beach town, the darker hours can be daunting. She says she's been catcalled, even stalked, on the job in the wee hours of the morning. "It's fun being out," she says, "but as a woman, I'm a bit more vulnerable too."

Electric scooters are a mixed bag for the cities in which they are deployed. Though many riders appreciate them, some residents are less keen, seeing them as an eyesore and a nuisance. The companies' launch tactics have also drawn scrutiny. In Santa Monica, Bird burst on the scene in 2017—the company is headquartered there—without permission from the local government. The city eventually sued; Bird agreed to pay a $300,000 fine. Even today, the anger over the incident hasn't entirely abated; on a recent stroll in Santa Monica, a Bird scooter was vandalized to read "TURD."

Thompson says she's felt the heat firsthand. She's received glares, snide remarks, and complaints about Bird when she's out collecting scooters for money. Devlin's 11-year-old son avoided telling friends that his father participated in Bird's scooter bounty program; the name has "a certain amount of negativity," the father says. "It's like saying, ‘My dad works at the DMV.'"

"We found that Juicers enjoy the flexibility of an hour or two of work in the evening and working in the morning," says Colin McMahon, who leads Lime's Juicer program. He adds that the company correlates its supply of Juicers with demand for its scooters in a given community. As for Bird, a spokesperson says the company's program can be a "great source" of supplemental income for its freelance chargers.

Unlike Bird and Lime, Lyft—which only deployed its Santa Monica fleet of electric scooters in September—uses full-time employees for recharging. It does help reduce some of the competitiveness, says Caroline Samponaro, head of bike, scooter, and pedestrian policy at the San Francisco company: "We can't control operational excellence if we aren't in control."

Which charging system is better, and which startup will prevail in the Great Scooter Wars of 2018 and beyond? Ask the chargers themselves, and the bigger picture becomes clear.

"There's no doubt that Bird chargers won't exist in the near future," says Devlin, pointing to the inevitability of technological progress. "But I don't know that I'll ever retire. I love working. I hope I never have to stop."

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THE LATEST FROM FORTUNE...

The Fortune Future 50 2018 List by Fortune staff

Atari CEO Talks U.S. Nasdaq Listing and Bringing the Company Back From the Brink by Lisa Marie Segarra

Bitcoin Scammer Hit With $2.5 Million Fine for Ponzi Scheme that Promised Outrageous Returns by Grace Dobush

Sonos Is Reportedly Eyeing a Partnership With Roku by Don Reisinger

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VENTURE DEALS

Panshi, a Hangzhou, China-based mobile advertising company, raised $320 million in Series D funding. Cybernaut Investment Group led the round, and was joined by Hana Financial Group and CCB Trust Co. Ltd. Read more.

Vector, a Tucson, Ariz.-based microsatellite launch company, raised $70 million in Series B funding. Kodem Growth Partners and Morgan Stanley Alternative Investment Partners led the round, and were joined by Sequoia Capital, Lightspeed Venture Partners and Shasta Ventures.

BitGo, a Palo Alto-based provider of cryptocurrency wallets and custody services, raised $57.5 million in Series B funding. Investors include Goldman Sachs' Principal Strategic Investments, Galaxy Digital Ventures, Valor Equity Partners, Craft Ventures, DRW and Redpoint Ventures.

Tastemade, a Santa Monica, Calif.-based digital video startup, raised $35 million in Series E funding, The Wall Street Journal reported. Goldman Sachs Growth Equity led the round, and was joined by Amazon, Raine Ventures, Comcast Ventures, Cool Japan Fund, Redpoint Ventures and Liberty Media. Read more.

Incorta, a San Francisco-based enterprise data analytics provider, raised $15 million in additional Series B funding. M12 and Telstra Ventures led the round.

ProducePay, a Los Angeles-based financing startup for fresh produce farmers, raised $14 million in Series B funding. Anterra Capital led the round, and was joined by Rabo Frontier Ventures, Coventure, Social Leverage, FJ Labs, Greenhouse Capital, Moonshots Capital and Tribeca Angels.

Mrs Wordsmith, a London-based educational entertainment company, raised $11 million in Series A funding. Trustbridge Partners led the round, and was joined by Reach Capital and Kindred Venture Capital.

Future Family, a San Francisco-based fertility clinic subscription service, raised $10 million in Series A funding. Aspect Ventures led the round, and was joined by iNovia, BBG, LaunchCapital, Ulu Ventures and Portfolia.

LiveSource, an Atlanta-based provider of supply chain management software, raised $7.4 million in funding. Fulcrum Equity Partners led the round, and was joined by IDEA Fund Partners, Alerion Ventures, Knoll Ventures, and Tamiami Angel Funds, as well as several individual investors.

Credit Benchmark, a London-based provider of credit risk data and analytics, raised $7 million in funding. Index Ventures led the round, along with Balderton Capital, Communitas Capital and a group of private investors.

WEconnect, a Seattle-based maker of an addiction recovery app, raised $6.05 million in Series A funding. Investors include ServiceNow founder Fred Luddy, Larry Leeds Jr., Metalab founder Andrew Wilkinson, Mark Ein, Sam Ketcham and Tim Kerr.

Thunder Experience Cloud, a San Francisco-based ad targeting and analytics company, raised $6 million in funding. The investors include a group of open ad tech companies.

Skydrop, a Mexico-based e-commerce logistics company, raised $5 million in bridge funding. Investors include Variv Capital, Y Combinator, FJ Labs, Sierra Ventures, EasyPost, Soma Capital, Sinai Ventures, GMF and Dynamo.

Seva, a New York-based provider of document management and other productivity applications, raised $2.4 million in seed funding, according to TechCrunch. Avalon Ventures led the round, and was joined by Studio VC. Read more.

Infraspeak, a Portugal-based facility management software startup, raised 1.6 million euros ($1.8 million) in funding. Investors include Firstminute Capital, Innovation Nest, Construtech Ventures, 500 Startups, and Caixa Capital.

Tez Financial Services, a Pakistan-based microfinance company raised $1.1 million in seed funding. Omidyar Network led the round, and was joined by Accion Venture Lab and Planet N.

Cujo AI, an El Segundo, Calif.-based provider of AI security and parental controls for for network operators, raised an undisclosed amount of Series B funding from KPN Ventures.

Momenta, a China-based autonomous driving company, raised an undisclosed amount of new funding. Investors include NIO Capital, Pagoda Investment, Tencent, China Merchants Group and CCB International, as well as sovereign funds in Shanghai and Suzhou.

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PRIVATE EQUITY DEALS

Grain Management, a Washington, D.C.-based private equity firm focused on communications investments, acquired Great Plains Communications, a Nebraska-based telecom provider. Financial terms were not disclosed.

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OTHER DEALS

Invesco agreed to acquire OppenheimerFunds, a New York-based asset manager, from Massachusetts Mutual Life Insurance Company for $5.7 billion.

Novartis agreed to acquire Endocyte, a West Lafayette, Ind.-based biotech company focused on cancer treatments, for $2.1 billion.

Micron agreed to acquire Intel's remaining stake in IM Flash Technologies, a joint venture between the two chip makers, for $1.5 billion.

 iAnthus Capital agreed to acquire MPX Bioceutical, a Canada-based medical cannabis company, in an all-stock transaction valued at $835 million.

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IPOs

SolarWinds, an Austin, Texas-based IT infrastructure management software maker, raised $375 million in an IPO of 25 million shares priced at $15, the low end of the range. The company posted revenue of $213.8 million in 2017 and loss of $351.8 million. Thoma Bravo Funds and Silver Lake back the firm. Goldman Sachs, J.P. Morgan, Morgan Stanley, Credit Suisse, BofA Merrill Lynch, Barclays, Citi, Evercore ISI, Jefferies, Macquarie Capital, Nomura Securities and RBC Capital Markets are the underwriters. It plans to list on the NYSE as "SWI." Read more.

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EXITS

Caleres agreed to acquire Vionic Group, a San Rafael, Calif.-based footwear brand, for $360 million. Vionic was backed by private equity firm Alpine Investors.

Ramphastos agreed to acquire HEMA, a Dutch retail chain, from Lion Capital. Financial terms weren't disclosed. Read more.

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FIRMS + FUNDS

GI Partners, a San Francisco-based private equity and real estate firm, is raising more than $1 billion for a new fund focused on digital infrastructure, Bloomberg reports. Read more.

First Round Capital, a San Francisco-based venture capital firm, is raising $209.4 million for its seventh fund, according to an SEC filing.

Balance Point Capital, a Westport, Conn.-based private equity firm, closed its third fund with $380 million.

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PEOPLE

Anousheh Ansari has joined the XPRIZE Foundation as CEO. She was previously CEO of Prodea Systems.

Ethan Choi has joined Accel as a principal on the growth investing team. He was previously at Spectrum Equity.

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Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here.

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