The rise of micromobility and the opportunity for circular thinking

In this article, Andrew Shannon, founding partner of Circularity Capital, discusses the rising popularity of micromobility solutions and explains how a new generation of businesses are helping to pioneer the sector’s circular future.

According to insight from EY, consumer adoption of micromobility continues to increase rapidly.[1] Demand for low emission transport, combined with rising fuel prices, the high cost of vehicle ownership and frustrations over public transport reliability has driven a fundamental shift away from more traditional mobility patterns, with the market projected to further expand at a CAGR of 12.5% between now and 2027.[2]

Primarily covering small, lightweight electric vehicles, including e-scooters, eBikes, electric skateboards and electric pedal assisted bicycles (pedelec), micromobility is widely considered the future of urban travel. McKinsey & Company suggests that uptake is predominantly by those aged 18-34, yet demand is increasing across all age demographics – even among the 55+ bracket.[3]

Numerous studies demonstrate the low carbon benefits of micromobility,[4] with its ability to reduce greenhouse gas emissions, lower noise pollution and tackle inner city congestion incredibly well publicised. In addition, its widespread adoption is said to support healthier communities (and workforces), reduce highway maintenance expenditure and create thousands of green jobs.

A circular approach to micromobility

While micromobility is already considered a pivotal part of the future mobility mix, a number of businesses are harnessing the circular economy to further accelerate the sector’s growth and unlock widespread commercial opportunity. One such company is our portfolio company REBIKE. Headquartered in Germany, the business is a leader in premium eBike rental and remanufacturing solutions, enabling the use of eBikes across multiple lifecycles, through a pioneering subscription and refurbishment model.

REBIKE delivers its refurbishment process in-house, through proprietary facilities, enabling customers to purchase pre-loved eBikes in ‘as new’ condition – with mechanical parts replaced and electronic parts, such as the battery and motor, inspected and serviced.

By doing so, the company is able to provide invaluable feedback on product design to its suppliers – allowing models to be optimised for longevity and sustainability. As a result, the average lifetime of every eBike is prolonged, while virgin manufacturing is displaced, with additional environmental benefits delivered by the electrification of transportation.

Alongside REBIKE, Circularity investee Grover now offers a wide range of micromobility solutions, including its own range of e-scooters under sub-brand GroverGo. Widely considered the ‘Netflix’ for state-of-the-art consumer tech, Grover enables individuals and businesses to rent products on a monthly basis, removing the need for upfront purchase costs and providing more flexibility than a financing plan.

The subscription service provides unbeatable access to the latest products and offers complete control of the subscription length to maximise affordability. At the end of the original subscription period, the customer can either buy the product, send it back or continue on a month-to-month basis.

But why are the examples of REBIKE and Grover relevant? Well, they demonstrate how circular businesses can outperform. Indeed, circular models that are restorative and regenerative by design can achieve both profit and purpose, while alleviating many of the challenges experienced by some of the sector’s more traditional approaches.

When it comes to the rise of micromobility across Europe, circular thinking can dramatically reduce unnecessary waste, while tackling the wider issues of affordability and product access. What’s more, it can help to create a more resilient industry and drive widespread economic benefit.

Growth-stage capital funding

When we founded Circularity Capital in 2015, we did so with the firm conviction that the entrepreneurs of businesses like REBIKE and Grover, who are developing the circular innovations to make this transition a reality, deserve a specialist investor with the right knowledge and network to unlock their full potential.

We have worked hard to develop a firm with the right capabilities to make this a reality and are currently deploying our second dedicated circular economy private growth-equity fund – at €215m, it is the largest of its kind globally.

Our current portfolio includes a number of leading circular businesses across Europe, but our ambition is to further grow this investment base by supporting leading, innovative, circular businesses where we can add value as a domain expert investor.

It’s clear to see that the circular economy provides a strong framework for decoupling business growth from resource constraints, enhancing resource productivity and driving competitive advantage. It also highlights a subset of business models which are enabling this transition and can generate premium returns for investors. Indeed, circular economy thinking will drive industry for years to come.

The supply chain is set to experience rapid change over the coming years. At Circularity Capital, we’re looking forward to playing a leading role in the transition towards a more resource-efficient future.

[1] https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/automotive-and-transportation/automotive-transportation-pdfs/ey-micromobility-moving-cities-into-a-sustainable-future.pdf

[2] https://www.marketsandmarkets.com/Market-Reports/micro-mobility-market-71389422.html

[3] https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/the-future-of-micromobility-ridership-and-revenue-after-a-crisis

[4] https://betterbikeshare.org/2023/04/05/assessing-the-environmental-impact-of-shared-micromobility/