According to The Information media, Uber is reportedly in negotiations to invest $170 million in the emergency fund-raising effort by U.S. electric scooter operator Lime. This information comes at a time when the epidemic caused by Covid19 has practically halted the startup’s activity. Half of the confined population and social distancing put Lime in serious trouble.He had no choice but to consider this emergency fund-raising as early as March. But this is not an entry into capital for Uber, since they would have already invested more than 80 million dollars to accompany the desired growth. Return on these investments between two leaders in urban mobility.
Lime and micro-mobility at a standstill
Despite the latest investments, financing conditions are not favourable for the electric scooter startup. Lime’s valuation would collapse by 79% to $2.4 billion in 2018 from $510 million at present. The Information also announces that the planned deal opens the possibility for Uber to acquire Lime at a fixed value between 2022 and 2024. In return, Uber would integrate Jump, its free-floating bicycle and scooter business, into Lime’s app. According to Pitchbook, Uber’s last investment in Lime was made in 2018 in a $335 million Series C financing.
A market opportunity for Uber
While the current agreement would lean in Uber’s favour, it is important to note that this investment comes at a time. Indeed, the urban mobility giant has also experienced a sharp drop in activity and thus increased pressure. Uber has already revised its financial forecast for the coming months. Therefore, it has announced to its employees that potential layoffs may occur. These would lead to a reduction in wage bill of almost 20%. We should soon know the extent of the impact of the current crisis on Uber’s business. The company will publish its results on May 7.
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