Key Takeaway: Revel’s stability-first business model may interest investors looking for moderate gains in the growing micro-mobility sector. 


Electric scooter sharing startup Revel is revving up. 

They’ve got a thousand scooters on the streets of New York and, as of this summer, 400 in Washington, D.C. Last week, just under two years since their founding, the Brooklyn-based company announced its expansion into Austin, Texas.

With a $27.6 million Series A round closed last month, they’re on their way to more cities, too. Just don’t expect them to pull an Uber and zoom in uninvited.

“There’s no reason for a company like us to launch without permission anywhere,” co-founder and CEO Frank Reig told Karma. “I can tell you right now that is something we’ll never be doing.”

Instead, Revel does the reverse: it approaches planners and politicians, gauges their interest, and proceeds only if a city is “really excited” about joining the company’s roster, Reig said. That’s what happened in Austin, where officials were eager to take cars off the roads of one of the nation’s most congested cities

“Regulators are much more open to new transit options, so it makes so much more sense to work with cities to get the buy-in,” Reig said. “If you’re working really well with that city, when people realize you’re operating responsibly and safely and well, that shows itself in who gets a permit.” 

Revel began last January after a trip to Europe left Reig wondering why e-scooters hadn’t caught on in U.S. cities. An angel round counting 56 investors — “friends and friends of friends of friends,” Reig said — got the company enough capital to deploy 68 scooters on the streets of Brooklyn and Queens in the summer of 2018. Users snapped them up, he said.

“We proved we could operate in a complicated city like New York, and that there’s interest in this type of vehicle,” said Reig. Investors agreed, supporting Revel through a seed round led by Maniv Mobility that allowed the company to grow its fleet in New York to 1,000 vehicles and expand to D.C. 

“There’s no reason for a company like us to launch without permission anywhere. I can tell you right now that is something we’ll never be doing.”

Urban planners across the U.S. are contending with demand for congestion and clean air solutions as Americans continue migrating to urban centers. Long popular in Europe and Asia, two-wheelers may offer an ideal solution for zipping around with a lower carbon footprint. 

“[E-scooters] are great for city residents who need to get somewhere but don’t need a loud vehicle that goes 60 miles an hour,” Sarah Kaufman, the associate director of NYU’s Rudin Center for Transportation, told Karma. “Cities have been taken aback by the overnight deployment of things like Uber and e-scooters, and Revel is really smart to work with cities [on] deployment.”

Chinese Manufacturer

Revel’s vehicles come from Chinese manufacturer NIU, the largest producer of lithium-ion battery powered e-scooters. The startup’s initial fleet marked the company’s stateside debut, and NIU has plans to sell directly to consumers in the near future. The Trump Administration’s trade war with China has increased tariffs on the scooters, but Reig said Revel will not be changing suppliers. “Is it unfortunate that it makes our business harder? Yes. But at the end of the day [NIU] is the best hardware in the market, and that’s why we’re working with them.” 

Reig’s company needs to carve out its niche in a rapidly growing market already stacked with competitors. According to a recent PitchBook report, the mobility sector has seen almost $174 billion in venture investment in the last ten years, with $26.6 billion in 2019 alone. 

“The major focus for investors in mobility tech has historically been top-line growth, but today’s investors are increasingly prioritizing margin sustainability and positive unit economics,” the report says. 

But overall, venture investment in the sector, particularly shared mobility, has slowed recently as regulators take interest in leading companies. Uber and Lyft are spending tens of millions fighting California’s recently-passed AB5, which forces platform companies to classify the workers their business models rely on as employees. Both ridesharing platforms are also far from profitability

“E-scooters are great for city residents who need to get somewhere but don’t need a loud vehicle that goes 60 miles an hour.”

Micromobility, the sub-sector of the industry covering light vehicles, has had similarly explosive but contentious growth. McKinsey estimates a U.S. market potential of $200-300 billion by 2030 for the category, noting that buy-in from cities will be crucial to reach those numbers. The PitchBook report adds that micromobility offers “many advantages relative to ridesharing and traditional means of transportation, including convenience and cost effectiveness.” 

Thanks to these sorts of endorsements, scooter startups have collectively netted over $1 billion in venture funding, making brands like Lime and Bird nearly ubiquitous on city streets around the world. Swiss electric standup scooter firm Voi said today it had raised $85 million from venture capital firms, and is profitable in several of the European cities in which it operates.

Such companies have also been preemptively banned by a handful of cities wary of scooter-clogged sidewalks and murky legal liability, and fleets rely on an unregulated, low-paying gig economy to handle battery charging. Unit economics are also not in their favor: a June Quartz report found that each Bird scooter, which costs about $500 to purchase, has an average lifespan of less than a month. (Bird says its most recent venture round, $275 million last month, is aimed at improving profitability.) That’s a lot of e-waste.

Revel enters this already-crowded market with hurdles of its own. Unlike calling a car or hopping on a scooter, riding an e-scooter legally requires a helmet and a driver’s license. Unit costs are much higher than a scooter, although Revel does not own its fleet, instead leasing its e-scooterse from third parties.

Like all mobility startups, Revel is taking on a risk of user error and has already seen at least one crash. “There are also safety concerns about drivers not being used to seeing this kind of vehicle around the city,” said NYU’s Kaufman. Still, she added, “[E-scooters] will likely have an easier time entering cities, because they’re more a more physically substantial form of transportation for people who may not feel safe on a scooter or a bicycle.” 

Reig says his company’s business model is designed around the pitfalls competitors find themselves navigating. All of Revel’s workers, including the ones who manage battery exchange and maintenance, are employees. Batteries are charged at a dedicated warehouse and get swapped out multiple times a week, ensuring a smooth customer experience. Engines are throttled to top out at 30 m.p.h., just over the 25 m.p.h. limit many cities have adopted as part of Vision Zero initiatives. Longer-lasting vehicles, despite being more expensive, help profitability.

Asad Hussain, an emerging technology analyst at PitchBook and the author of the report, told Karma this could inspire confidence in investors.“We believe [Revel] could be a viable model, as the increased durability and longer lifespans of [e-scooters] help drive profitability,” he said. “We estimate this could be a mid-teens contribution margin business, below e-scooters but attractive compared to other mobility industries such as ridesharing and food delivery.”

With so much up-front capital required to enter a new market, Reig said Revel’s expansion will be modest but, he hopes, dependable. In his sights are further expansion into Brooklyn and Queens, where he said residents ask “every day” for Revel in their neighborhood. The company is also seeking to increase their cap in D.C. by spring 2020. 

“I see Revel continuing to double down in existing markets and just be better: operate better, have more vehicles, cover more area,” Reig said. Expansion to more cities is on the horizon, too, although Reig did not say which ones might be next – just that “the conversations are ongoing.”