Bird Buys Competitor Scoot, Further Consolidating the Crowded Scooter-Rental Market

June 12, 2019, 7:58 PM UTC

Electric scooter rental firm Bird has agreed to buy competitor Scoot as it continues to expand its global footprint.

The acquisition, announced Wednesday, is an example of what many market watchers have been saying about the scooter industry: The long list of rivals will consolidate and that a few major players left standing will prevail. The survivors will be the ones that can find a way to turn a profit, experts say, reversing the huge losses that they’ve racked up since bursting onto the scene a couple of years ago.

Bird did not disclose the financial details about its acquisition. In its most recent private funding round in 2017, Scoot was valued at $71.5 million.

In addition to Bird, scooter rental companies include Lime and Spin. Uber also entered the market in 2018 by acquiring Jump, which offers both scooters and bikes. Lyft bought electric bike company Motivate the same year to help with the roll out of its first scooters.

Scoot, founded in 2012 in San Francisco, has a small footprint. Other than San Francisco, it operates in Barcelona and Santiago, Chile.

The company, which has raised $46.9 million in venture capital, according to PitchBook, had initially focused on mopeds. But last year, it moved into electric scooters in San Francisco.

Michael Keating, Scoot’s founder and president, said that Scoot’s mission hasn’t changed. But with help from Bird, the company will be able to expand and improve its products.

Bird, based in Santa Monica, Calif., was founded in 2017 and has since grown to 900 employees. It operates in 100 cities worldwide and at nine universities.

By buying Scoot, Bird gets access to the San Francisco market, a huge hole in its scooter rental portfolio. Last year, the city rejected Bird’s application to operate and buying Scoot allows it to operate using the Scoot brand. In any case, Bird had already planned to re-enter San Francisco with a slightly tweaked offering from its core rental business of a few minutes to a few hours. Instead Bird wants to rent scooters monthly, but the city has yet to weigh in on whether to allow it.

Bird has a raised a total of $718 million, according to PitchBook and was last valued at $2.3 billion in 2018.

In the past couple of months, Bird has rolled out two new products: the Bird Cruiser, a cross between an e-bike and e-scooter; and the Bird One, a scooter that it’s both renting and selling to consumers. With the addition of Scoot, Bird will have a second brand of electric scooters and electric bikes along with electric mopeds.

Miles Clements, an investor at venture capital firm Accel, which owns a stake in Bird, previously said believes Bird operations, based on its size and efficiency, will be one of the big winners from an eventual consolidation.

“We are beginning to see that smaller, more regional competitors with inferior unit economics are likely to falter,” he said. “At the same time, the larger players benefit from a network effect whereby economies of scale help them to operate more cost effectively and universal brand recognition helps them acquire customers more organically.”

More must-read stories from Fortune:

—Phishing hackers can now bypass two-factor authentication

Apple’s sign-in feature is a “shot across the bow” at tech giant rivals

—Uber’s CEO has absorbed the COO role for more control

—Google is changing its search results. Here’s what to expect

—Listen to our new audio briefing, Fortune 500 Daily

Catch up with Data Sheet, Fortune‘s daily digest on the business of tech.

Read More

Artificial IntelligenceCryptocurrencyMetaverseCybersecurityTech Forward