Fifth Wall Backs LimeBike to Bring Bike Sharing to Largest US Real Estate Owners & Operators
Fifth Wall helps LimeBike access “the last 10 feet of the last mile” through real estate partnerships
Fifth Wall is thrilled to announce a strategic investment in LimeBike, the largest and fastest growing dock-free bikeshare operator in the U.S. Fifth Wall’s investment comes alongside $70 million of new capital raised from Andreessen Horowitz, Coatue Management and many other exceptional investors. LimeBike has emerged as the clear market leader in dock-free, shared smart mobility thanks to its innovative business model, capitalization, operational execution, and cross-border supply chain experience. Bike sharing has become an integral aspect of urban transportation infrastructure by alleviating congestion and bridging “last mile” / “short haul” transit challenges automobiles truly cannot solve (to learn more about the idea of “last mile” transportation, listen to an interview with LimeBike’s Co-Founder and CEO, Toby Sun, on our podcast).
Why does LimeBike make sense for Fifth Wall given our Built World investment thesis? First, Fifth Wall’s strategic real estate investors include many of the largest real estate owners in the U.S. Those owners all have a vested interest in making American cities more accessible, with less congestion and pollution. Second, mass consumer adoption of bike sharing leads to far more livable cities and increases urban property values. Third, real estate owners want to decrease parking requirements of their assets as most remain over-parked as parking utilization is declining due to falling rates of car ownership amongst Millennials and increased use of ridesharing. Fourth, real estate operators have a unique opportunity to better facilitate “first and last mile” commuter challenges. Controlling the consumer endpoints: where people live, work, and shop, is critical to driving broad bike sharing adoption. Watching the trend and rapid growth of the space led Fifth Wall to believe bike sharing represents an enormous opportunity for our strategic investors to massively influence the outcome in the space.
Despite the market’s relative infancy, bike sharing is growing at an astounding 25 percent per year. In China, over 50 million bike share rides per day are logged compared to the 28 million total bike share rides in the U.S. in 2016; meaning there are almost two times as many bike share rides in China per day as there are in the U.S. per year. City transportation systems with effective bike share programs are seeing corresponding decreases in traffic congestion (particularly in dense, heavily developed, urban areas) and have found bike sharing a cost-effective way to streamline last mile commutes. The growing market is expected to continue acting as a boon for cities and municipalities, corporations, and real estate operators.
There are even more profound social, governmental, environmental and public health benefits of bike sharing. Bike sharing reduces the strain on America’s increasingly challenged roadway infrastructure at a time when there is largely bipartisan support for a national infrastructure investment program. Using four thousand pounds of metal (the weight of a typical car) to transport a single person short distances is environmentally irresponsible. Cars release approximately 333 million tons of carbon dioxide into the atmosphere annually, which is 20 percent of the world’s total according to the Environmental Defense Fund. Motor vehicle crashes are consistently among the top ten leading causes of death in America, killing 37,461 Americans in 2016 alone. Reducing the number of cars on the road is a positive societal trend and Fifth Wall believes an emergent bike sharing winner can accelerate that reduction.
Launched in January 2017, LimeBike quickly rose to the top ranks of the bike sharing market, taking its place as the largest and fastest growing dockless bike share operator in the U.S. In less than six months of operations, Limebike effectively lapped its competition with 35,000 bikes deployed available in 45 key markets around the country, with a focus on large U.S. cities and college campuses.
Dockless technology sets LimeBike apart from alternatives and gives riders a higher level of flexibility and convenience to pick up and drop off bikes anywhere. First generation bike sharing solutions that emerged in many cities over the last decade were docked bike sharing, like Capital Bikeshare in Washington DC and Citibike in New York. However, the limitations of first generation solutions became immediately apparent to both consumers and real estate owners. Hence, adoption of U.S. bike sharing has lagged significantly behind Europe and Asia. First, it was incredibly costly and inefficient to install large complex docking stations and equally hard to secure the appropriate permitting and easements to provide a sufficient density of bikes to be useful to most city dwellers. Consequently, docked bike stations were too sparsely and inconveniently located for most potential riders; often times long walking distances from their offices, homes, or retail districts. Inconvenience in turn spawned another problem for first generation docked bike sharing: because the utilization of the bikes were low, companies like Citibike and Capital Bikeshare had to maintain high per ride prices to justify the significant cost of installing the docks and maintaining their bikes. These high prices in turn further decreased utilization. Ultimately, these first generation docked bikeshare solutions had all the characteristic of a local taxi monopoly before Uber and Lyft: inconvenience, high cost, and restricted supply. Like local taxi monopolies before Uber, docked bike sharing solutions have sought to sustain themselves by establishing exclusive rights to operate in certain cities like New York.
In effect, docked bike sharing programs were the wrong “test” to run to truly validate if short haul transportation in the U.S. could be reimagined through bikes. However, technology innovations now permit truly dockless bike sharing programs, meaning bikes can truly be accessed anywhere and can achieve citywide ubiquity and coverage. Not having to install and/or maintain docks means a bike can be ridden up to the door of your destination or picked up right outside your office. Ubiquity in turn increases utilization as LimeBike has demonstrated. Additionally, unencumbered by the high costs of dock installation and maintenance, LimeBike can offer a lower cost to potential riders. Moreover, because LimeBike is free from installed docking stations, they can increase or decrease the supply of bikes in any market to meet demand and/or reallocate bikes nationwide due to seasonality. Lastly, Limebike doesn’t require capital from the cities or college campuses where it launches and can expand incredibly rapidly and develop a national network effect as evidenced by the fact that in just the last 6 months LimeBike has successfully launched in over 37 markets across the U.S. LimeBike’s ambitious expansion strategy strategy, being on pace to open one new market a week) is clearly resonating with bike riders — LimeBike reached the top spot in app downloads in just six months, eclipsing the closest dockless player by more than double the downloads.
The LimeBike team also has an expanded target market in mind; the company is releasing e-scooters and e-bikes with expanded ranges from one mile to three-plus miles (pilot programs currently running). It recently launched the country’s biggest e-bike deployment in Seattle. The additional range stands to greatly increase bike sharing adoption in cities with significant elevation gains (such as San Francisco and Seattle) and to increase the range from major public transportation hubs.
LimeBike’s team has a strong and deep background in manufacturing with operating experience in Asia, where the majority of bikes and scooters are made as well as being the largest addressable market for future growth. Co-Founders Toby Sun (CEO) and Brad Bao (Executive Chairman) were part of Fosun Capital, and have collective experience spanning PepsiCo, Deloitte Consulting, and Tencent America. Their CTO and co-founder, Charlie Gao, was a crucial engineer at Square and Facebook. This dynamic team is qualified and well-positioned to lead LimeBike’s growth trajectory. The team is also diverse in background, comprised of former legislative staff members, campaign strategists, serial entrepreneurs, and top talents from various tech firms.
The “Big Picture” of Bikeshare and Real Estate Integrations
Bike sharing is reshaping cities across the U.S. and high-traffic urban real estate consumer endpoints have the real advantage — Fifth Wall LPs control the last ten feet of the last mile across all types of real estate locations including: commercial (Hines, CBRE, Rudin), retail (Macerich), multifamily residences (EQR, Hines, LMC), hotels (Host), and single family residences (Lennar). These locations mark the start and end of the majority of consumer transit routes.
The opportunity is clear: Real estate owners (not cities) control the bikes and docking stations at their properties. Fifth Wall LPs benefit from making bike sharing an integrated amenity for tenants, at no cost to the landlords,that is accessible and convenient within existing and new real estate assets. To date, Fifth Wall LPs have executed no major partnerships in this space, and have identified LimeBike as the clear market leader capable of integrating with the largest real estate operators in the U.S. Fifth Wall will work closely with LimeBike to establish “hubs” for LimeBikes where consumers can ready access available LimeBikes, buildings can ensure organized access to bikes for their tenants, and partnerships with local retail establishments could be established to encourage customers to visit on a bike share.
With the real estate partnerships Fifth Wall can bring to bear to support LimeBike’s growth, we believe we may be on the precipice of a watershed paradigm shift in short-haul transportation in the U.S. with LimeBike positioned as the market pioneer in this shift. If bike sharing even marginally begins to replace automobile usage, urban life in America will be forever improved for residents, for governments, and for major stakeholders like real estate owners. LimeBike has a meaningful competitive moat, strengthened by placement with Fifth Wall’s real estate operator network and is primed for an impactful outcome as the category leader in the rapidly growing bike sharing market.