Lime, the world’s largest shared electric micro-mobility firm, has raised $523 million in convertible debt and term loan funding, which Lime CEO Wayne Ting believes is the next step on the company’s route to going public next year.
Lime plans to utilize the funds to accelerate its decarbonization efforts, replace a large chunk of its fleet with Gen4 e-bikes and e-scooters, expand into new cities, and create new technologies to help it win more local RFPs.
“I believe it really underscores the increasing interest in micromobility as a sector, and more significantly, the acknowledgement that Lime is the unchallenged leader in this field,” Ting told TechCrunch.
“Investors gamble that the firm will go public, and they want to get in on the ground early since they get to come in at a discount, therefore companies often do a convertible note as the last round before they go IPO.” And we absolutely believe that the fact that over $400 million in financing has come in is a significant milestone as we prepare to take Lime public next year.”
Convertible debt, headed by Abu Dhabi Growth Fund, Fidelity Management & Research Company, Uber, and some funds administered by Highbridge Capital Management, accounts for $418 million of the overall fundraising amount.
When Lime goes public, the debt will immediately convert to shares. The remaining $105 million is backed by a senior secured term loan from UBS O’Connor, a private credit firm. Lime refused to share the loan’s details.
Lime’s prior investors included Fidelity and Uber. Fidelity was a major investor in Lime’s $310 million Series D investment in 2019, while Uber led a $170 million down round for Lime last year as the company struggled with pandemic issues a deal that saw Lime purchase Uber’s micromobility subsidiary Jump. This news comes as competitor Bird joins the market via a SPAC transaction with Switchback II Corporation, after Lime’s announced plan to go public next year. Ting did not indicate when Lime would file for an IPO next year or if it would go the regular route or try a SPAC merger, but people close to the firm think the SPAC path is improbable.
“Our aim is to make sure we have enough cash to complete our purpose, which is to establish a shared, inexpensive, and environmentally friendly transportation option,” Ting added.
Lime’s carbon targets were validated by the Science-Based Targets Initiative, an organization that promotes best practices in emissions reductions based on climate science, earlier this week, and the company announced that it is working toward being in compliance with the Paris Climate Accord and being net-zero by 2030.
The business is allocating $20 million from its newest round to decarbonization measures, such as investing in cleaner technology and ensuring that 80% of its supplier chain meets improved emissions targets.
According to Lime’s carbon targets report, capital goods, which include the cars themselves as well as all of the material extraction and manufacture that goes into them, account for 44.3 percent of the company’s overall emissions. Pre-purchased goods and services, which include scooter components and warehousing costs, account for 25.8% of the total.
“I want to show actual outcomes via capital expenditures to changing our processes, to pushing our suppliers,” said Ting, who also stated that Lime would no longer engage with suppliers who did not have their own carbon targets, in the hopes that other firms would follow suit.
“When it comes to decarbonization and transportation, we mean business.” I want our investors to know that this is what this company stands for when we do become a public company.”
Lime plans to utilize the cash to expand on its existing local permissions and strengthen its partnerships in the cities where it already operates. Ting added that this may include developing additional vehicle modes or investing in technology “that genuinely makes us good partners to cities as we expand and scale our company,” but he did not say what new modes or technologies Lime is looking into.
However, during a WSJ tech event last month, Ting stated that Lime is interested in joining the sidewalk detecting technology club, and the CEO stated that Lime is EBITDA profitable for the second time in the third quarter.
Lime has gotten to this point mostly through bottom-line growth, indicating that it is running a tight ship. Despite the fact that COVID launched 80 contracts this year, the operator has continued to effect new ridership and top-line growth.
Lime’s major use cases, commuting, and tourism, are slowly but steadily returning. The US recently stated that it would suspend the travel restriction for Europeans who have received two vaccinations.
Lime’s pre-IPO plan also includes expanding into additional cities. Ting said Lime is trying to expand in North America and Europe, but it is also considering the Middle East, where the company’s principal investor in this round is situated. “We’ve actually seen a ton of growth in interstate travel, and by 2021, our income will be back to pre-pandemic levels,” Ting added.
“People are searching for a safe, inexpensive, single-passenger mode of transportation, and many are turning to micromobility platforms like Lime.” Looking ahead to 2022, I see an opportunity to strengthen our engagement with riders.”