Mobility start-ups hurt by coronavirus
After the air transport and automotive industry, mobility start-ups are feeling the blow of the lockdown situation introduced to reduce the spread of the coronavirus. Often based on precarious funds, free-floating services, ride-hailing, and car-sharing start-ups are on the brink of bankruptcy if the situation is extended.
The current lockdown situation that most European countries have decided to impose to try and flatten the infection-spread curve of the coronavirus is hurting the worldwide economy. Car manufacturers are closing their plants, while 75,7% of all planes are grounded. While major companies with vast bank reserves might be able to survive without cash flow for some months, SMEs and start-ups are struggling, especially in the sector of new mobility solutions.
“The very nature of a start-up is to consume its cash to develop and to grow its market share. Those that aren’t backed by major companies or groups have reasons to worry. If the state of confinement lasts four weeks, there will certainly be bankruptcies. If it lasts six to eight weeks or more, this crisis will cost a lot to the mobility and transport sector,” explains Alexandre Quintard, founder of the Cardinal strategy and public consultancy.
“We have had to put a good part of our employees under temporary unemployment, but we still have to pay rent, insurances, leasing, and so on,” declares Cityscoot CEO and founder, Bertrand Fleurose. Before the crisis, the shared electric scooter start-up had just broadened its activity by launching its platform in Milan and Rome.
Closed for now
All mobility services have had different reactions to the confinement. Bird and Voi have suspended all activities in Europe, and so did Uber with its Jump shared bikes and scooters and its UberPOOL carpooling service. Car-sharing service, Klaxit, and Cityscoot have decided to continue to be operational. Both companies have made their platform available to health services.
Most are hoping for some government aid to help them keep their heads above the water. “We have the chance to be a French company. The State helps French companies, whatever happens, I’ve checked with the BPI about the exceptional support systems,” confirms Mr. Fleurose.
“The mobility issues with big municipalities and cities will continue to exist after the coronavirus crisis. There will still be congestion, and the need to get around will still be very important. Shared mobility still has life in front of it,” hopes Julien Honnart, founder of Klaxit.