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Bird, the troubled Sequoia-backed scooter company, is exiting markets and adding balance sheet risk

October 19, 2022, 11:10 AM UTC

One might say that Bird is no longer flying high.

Bird was one of a handful of unprofitable electric-powered mobility companies that sailed into the public markets during the SPAC-hype of 2020 and 2021 on the promise of a greener future, reaping fresh capital from public investors and, at the outset at least, offering VC backers plump returns for their LPs. Bird—backed by prominent venture capitalists including Sequoia Capital’s top captain Roelof Botha, Craft Ventures, Fidelity, and Valor Equity Partners—joined in on the fun. It went public via a SPAC merger less than a year ago

The deal delivered $414 million in cash into Bird’s hands—$264 million from the public offering plus $150 million in debt from Apollo. At the time, then-CEO Travis VanderZanden assured me that the company was recovering from the difficulties it had experienced during the pandemic, when the company had to pull its scooters off the streets and revenue was sliced nearly in half. Less than a year later, it doesn’t seem as if the hundreds of millions in new cash has managed to take the company very far. 

Yesterday, the company announced it was fully exiting business in Germany, Sweden, and Norway, and that it was winding down operations in dozens of small to mid-sized markets across the U.S. and Europe, Middle East, and Africa (EMEA) as it strives to get profitable. The announcement came just a week after Bird said it had made a $45 million payment to Apollo to reduce the company’s outstanding balance.  A corresponding SEC disclosure revealed that, as part of its updated financing agreement, Bird Rides had guaranteed all of its subsidiary’s previous obligations to Apollo—meaning that Apollo will likely have more to scrape back if the company were to go bankrupt or not be able to pay its debts. “[Bird Rides] provides an unsecured guarantee in respect of all outstanding loans under the Amended Loan Agreement,” the filing states. (A Bird spokeswoman says “this is a customary feature of secured credit facilities.”)

Earlier this year, Bird reportedly laid off about 23% of its staff, as part of its newfound focus on profitability (a spokeswoman says the layoffs were a planned effort “as a part of our path to profitability initiatives”). The scooter company also slowed down its product sales expansion and cut costs on corporate overhead, overall returning about $80 million in costs on an annualized basis. In May, Bird entered into an agreement to sell up to $100 million worth of its shares to Yorkville Advisors, a hedge fund known to offer equity lines of credit to cash-desperate companies including EV companies Canoo and Nikola.

Bird’s stock has continued to plunge this year, with the New York Stock Exchange even threatening to delist the floundering company. Bird is in penny-stock territory, trading at less than 40 cents at market close yesterday, compared to the $8.40 per share it traded at when it first hit the exchange. 

Even as Bird’s revenue figures grew in the first half of this year compared to 2021, the company reported a net loss of more than $300 million in the first six months of 2022, more than double the $120 million it lost over the same period a year ago. 

These numbers have hardly seemed to have appeased Bird’s directors, several of whom are partners at the VC firms that have backed the company for years. 

Not too long after the company disclosed its performance from the first half of the year, Bird revealed in SEC filings that its board—comprised of Sequoia’s Botha, Goldcrest Capital’s Daniel Friedland, and Craft Ventures co-founder David Sacks, among other directors—was splitting ways with, or adjusting the responsibilities of, several of the company’s executives. VanderZanden, who still remains Chair of Bird’s board, had resigned as CEO (he had stepped back as president in June), as did the company’s CFO, CTO, and its Chief Vehicle Officer. The board had appointed Shane Torchiana, the company’s former COO and senior vice president of corporate development and strategy, as president and CEO and it had brought on Ben Lu, formerly with Archer Aviation, to run the company’s financials. The board has also hired a new CTO. One of Bird’s former board members, Twitch co-founder and Goat Capital GP Justin Kan, stepped down amid the re-shuffling. Indeed, more than half of the company’s management team has turned over—as was pointed out in Ali Griswold’s newsletter Oversharing—and VanderZanden’s mansion in Miami is up for sale.

Venture capitalists still own a significant chunk of the company, per S&P Market Intelligence, which pegs VC and private equity firms at owning about a 24% stake. Some 5% of Bird’s shares are held by Sequoia, according to August SEC filings. At those figures, Sequoia’s stake would be worth just about $4.6 million, compared to $76 million in January. Craft Ventures owns about 9.5% of the company, per S&P Market Intelligence data. A Sequoia spokeswoman declined to comment, and Craft Ventures didn’t respond.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- Jasper, an Austin-based A.I. content platform, raised $125 million in Series A funding. Insight Partners led the round and was joined by investors including Coatue, Bessemer Venture Partners, IVP, Foundation Capital, Founders Circle Capital, HubSpot Ventures, and others.

- Stability AI, a London, U.K.-based open-source A.I. startup, raised $101 million in seed funding co-led by Coatue Management and Lightspeed Venture Partners

- Ten Thousand Coffees, a Toronto, Canada-based talent experience platform, raised $56 million in funding from Five Elms Capital

- RisingWave Labs, a San Francisco-based streaming database company, raised $36 million in funding led by Yunqi Partners.

- Shibumi, a Norwalk, Conn.-based portfolio management software provider for enterprise customers, raised $30 million in funding from Guidepost Growth Equity.  

- Axoft, a Boston-based neurotechnology company, raised $8 million in seed funding. The Engine led the round and was joined by investors including Ab Initio Capital, Decent Capital, Alumni Ventures, Safar Partners, AIBasis, LiquidMetal VC, Taihill Venture, AMINO Capital, Blindspot Ventures, and Mintz

- Freebee, a Miami-based free transportation app to local communities, raised $8 million in Series A funding. bp ventures led the round and was joined by Tensile Mobility.

- Paytrix, a London, U.K.-based embedded payments company for vertical software platforms, raised £5 million ($5.65 million) in funding. Hambro Perks led the round and was joined by investors including Bain Capital Ventures, Fin VC, Better Tomorrow Ventures, The Fintech Fund, and others. 

- Noala, a London, U.K.-based speech and language therapy platform, raised $4 million in seed funding. LocalGlobe led the round and was joined by investors including Cocoa Ventures and other angels. 

- Generation Prime, a Singapore-based IVF and related health services provider, raised $3 million in funding. Recharge Capital, Thomson Medical Group, and Shamrock Holdings invested in the round. 

PRIVATE EQUITY

- Alsendo, backed by Abris Capital Partners, acquired a majority stake in Innoship, a Bucharest, Romania-based SaaS delivery management platform. Financial terms were not disclosed.

- Bison Capital Partners and an affiliate of Angeles Equity Partners, acquired Lapmaster Parent, a Mt Prospect, Ill.-based precision machinery manufacturer for lapping, grinding, cutting, and polishing substrates. Financial terms were not disclosed. 

- Francisco Partners acquired a minority stake in Acoustic, an Atlanta-based marketing and customer experience provider for B2C brands. Financial terms were not disclosed. 

- JSI, a Stone-Goff Partners portfolio company, acquired Mitchell Engineering, a Wills Point, Texas-based plant engineering and design services provider to telecommunication clients. Financial terms were not disclosed.  

- Priority Power Management, backed by Ara Partners and OakTree Capital Management, acquired AB Power Advisors, an Austin-based advisory services firm. Financial terms were not disclosed. 

- The Purple Guys, backed by Kian Capital, acquired Golden Tech, a Valparaiso, Ind.-based IT managed services provider. Financial terms were not disclosed.

EXITS

- Thoma Bravo acquired Ping Identity, a Denver-based intelligent identity solution for enterprise, from Vista Equity Partners for approximately $2.8 billion.

- Resource Label Group acquired MedLit Solutions, a Garner, N.C. and Windsor, N.J.-based pharmaceutical packaging provider, from CORE Industrial Partners. Financial terms were not disclosed.  

OTHER

- JETNET agreed to acquire Asset Insight, a Sandwich, Ill.-based aviation-focused valuation firm. Financial terms were not disclosed. 

- Verseon International Corporation acquired Edammo, an Iowa City, Iowa-based A.I. platform for the medicine and life sciences industry. Financial terms were not disclosed.

IPOS 

- Mobileye Global, a Jerusalem-based self-driving technology company, plans to raise $779 million through the sale of 41 million shares priced between $18 to $20. Intel owns the company.

- Acrivon Therapeutics, a Watertown, Mass.-based precision oncology therapeutics developer, filed for an initial public offering. Wellington Management, Surveyor Capital, RA Capital, Perceptive Advisors, Sands Capital and Chione back the firm.

PEOPLE

- Brighton Park Capital, a Greenwich, Conn.-based investment firm, hired Calen Angert as partner and head of the healthcare group and John Cordo as principal focused on cybersecurity. Formerly, Angert was with TA Associates and Cordo was with NightDragon

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