LOS ANGELES -- Perpetual gridlock in Los Angeles and San Francisco has inspired a booming industry of on-demand electric rental scooters, now a familiar sight whizzing along sidewalks and bike lanes in cities around the world.
But there's a limit to how much congestion the e-scooter market can bear.
In a deal that could mark the first major step toward a broader consolidation, Santa Monica's Bird Rides Inc. on Wednesday acquired the San Francisco electric scooter company Scoot for an undisclosed sum.
For Bird, the purchase represents a chance to relaunch its service in the seat of the tech industry. Scoot was one of only two companies given permits to operate in San Francisco by the city's Municipal Transportation Agency last August, in what amounted to a regulatory snub for Bird and Lime, the two largest scooter companies in operation.
Now Bird has found a way to buy its way back in -- though it remains to be seen whether any scooter company can figure out a path to profitability, given the difficulties of operating a fleet of expensive, breakable vehicles.
Terms of the deal were not disclosed. Founded in 2011, Scoot was last valued at $71 million and had raised a total of $47 million in funding. Bird has raised more than $400 million and was last valued at $2 billion.
Part of Scoot's value to Bird comes in the form of both its long and amicable relationship with San Francisco regulators and its ability to operate in the city, several sources familiar with the industry told The Times.
Mark Suster, a partner at Upfront Ventures and an early investor in Bird, said Scoot's early foray into micro-mobility with the launch of its fleet of mopeds played an important role in the decision to acquire the company.
"The Scoot management team was one of the most innovative early leaders in our industry. They were doing it before Bird even existed, and that was critical to the deal," Suster said. "Through that they learned how to do city operations and learned how to work with cities to be good citywide citizens."
In awarding permits to Scoot and its local competitor, Skip, over Lime, Bird and other applicants, the San Francisco Municipal Transportation Agency cited the winners' commitments to safety and Scoot's established record of operating a fleet of vehicles in San Francisco legally.