Before the COVID-19 pandemic, investment in the shared micromobility industry has soared in line with the growing number of trips and usage. From 2015 to 2019, almost $7 billion was invested in this market. Funding shrank sharply in 2020 to about $800 million, but now the industry is resuming its growth trajectory, as we predicted in a previous article, and capital flows are also increasing. In 2021, micromobility players attracted an estimated $2.9 billion in new investment and may exceed that level in 2022. But capital flows are now coming from different types of investors, and they are going to different regions and types of vehicles than in the past .
To gain better insight into these differences, we used McKinsey’s Micromobility Investment Database, which applies big data algorithms to track publicly disclosed investments in companies that provide shared micromobility services or manufacture vehicles and supporting technologies for the shared micromobility industry.1 The tool can analyze investments by investor and by vehicle type – for example e-scooters, electric bicycles and electric mopeds – as well as geographical areas. It focuses on investments in companies in the main micromobility markets in Asia, Europe and North America.
Regional shift to Europe
Since 2018, about $8.4 billion has been invested in micromobility companies in the three main markets – split fairly evenly between Asia ($3.1 billion, or 37 percent), North America ($2.9 billion, 34 percent) and Europe ($2.4 billion, 29 percent) ) (Exhibit 1).
To determine whether funding patterns have changed over time, we segmented total investment by looking at two time periods: the years before the pandemic (2018 to 2019) and the following three years (2020 to 2022). Our analysis shows that the flow of funds has not been evenly distributed in recent years and that Europe has taken the lead from Asia. Investments in micromobility companies based in Europe accounted for only 12 percent of global flows before the pandemic, but almost 50 percent from 2020 to 2022. Investments in North American companies also increased in the second time period. Asia had the largest decline in funding over time: from $2.7 billion (60 percent of the total) to just $400 million (10 percent).
One of the reasons for this change may be the accelerated measures (such as the construction of dedicated city lanes for bicycles and scooters) that European politicians have used to make micromobility safer and more attractive. In addition, many European players have grown extremely rapidly in recent years and are acquiring smaller competitors, thus driving continued investment.
E-scooters remain the most common type of vehicle
Globally, companies that focused on shared e-scooters attracted the most investment – $5.2 billion – from 2018 to 2022, followed by bicycles at $3 billion and mopeds at $200 million (both including electric offerings ). Since the beginning of the pandemic, the share of investments directed at e-scooters has increased and now stands at nearly 90 percent. This concentrated flow is likely the result of continued consolidation among e-scooter vendors as market leaders acquire smaller players (Exhibit 2).
A breakdown of investment by region and vehicle type shows that e-scooters attracted 98 percent of total funding in North America and 86 percent in Europe from 2018 to 2022. In contrast, in Asia bicycles attracted the most investments – more than 80 percent of the total amount.
Another insight emerged through a deep analysis of investments in companies that focus on providing support services for shared micromobility, rather than offering the shared services themselves. The analysis focuses on startups that provide services related to parking, charging, fleet management, maintenance and relocation. Before the pandemic, investors had provided about $100 million in funding to such companies in China, Europe and North America. That number more than tripled between 2020 and 2022, reaching almost $350 million. Much of this increase relates to parking and charging solutions, which account for almost half of total investment, compared to only about 10 percent before the pandemic. This strong growth may have occurred because it is becoming increasingly apparent that efficient parking and charging infrastructure can reduce both operating costs and vehicle downtime. Such advantages are particularly important for free-floating, shared micromobile fleets.
Institutional investors continue to dominate the market
Investors are divided into three main types:
- institutional investors, including banks, venture capitalists and private equity firms
- OEMs (including those for micromobility) and suppliers
- mobility service providers
From 2018 to 2022, institutional investors provided about $7.7 billion in micromobility funding – 92 percent of the total $8.4 billion received. Mobility service providers accounted for about $500 million in funding, or 6 percent, and OEMs for about $2,070 million, or 2 percent (Exhibit 3).
In the wake of the pandemic, institutional investors still account for the largest share of capital, but the gap has narrowed and the amount they invest has declined in absolute terms: they accounted for about $4.2 billion in funding from 2018 to 2019, but only 3, $4 billion from 2020 to 2022. Over the same time periods, the amount invested by players in mobility has nearly tripled, to $390 million, from $140 million.
Several trends help explain the investment shift. Before the pandemic, many venture capital firms invested in immature micromobility players, most likely because they saw the potential of this nascent market. Recently, larger shared mobility players have been increasing their efforts to enter the micromobility segment through mergers and acquisitions, thereby increasing their share of investment. In addition, existing micromobility players are investing more in their businesses as they expand into new cities or double down on new vehicle platforms or customer segments in the cities where they currently operate.
Institutional investors still favored electric bike businesses in 2018, channeling around 72 percent of their funding into this segment. However, their preferences began to change in 2019 as the buzz around e-scooters began to accelerate. The share of institutional investment going into this segment has risen from about 60 percent in 2019 to nearly 90 percent in 2021. Electric mopeds have attracted little interest from institutional investors over the years.
McKinsey data shows investment patterns in micromobility have changed since the pandemic, with more funding now flowing to Europe and e-scooters. Institutional investors still provide the most funds, but their share has declined. The micromobility segment will continue to develop rapidly and we will continue to monitor developments. Stay on the line.
1. The database collects information from Crunchbase, Pitchbook, company websites and major media outlets.
Kersten Heinecke is a partner in McKinsey’s Frankfurt office, where Benedict Kloss is an associate partner; Darius Short is a solutions associate in the Munich office; and Timo Möller is a partner in the Cologne office.
The authors would like to thank Angela Ruan for her contributions to this article.