Lime Raises $523M in Funding

Lime Secures $523 Million Funding Round, Paving the Way for Potential IPO

Lime, a leading provider of shared electric micromobility solutions, has successfully completed a $523 million funding round comprised of convertible debt and term loan financing. According to Lime CEO Wayne Ting, this capital infusion represents a crucial advancement toward the company’s anticipated public offering next year.

Investment Allocation and Strategic Goals

The newly acquired funds will be strategically allocated to bolster Lime’s decarbonization initiatives. A significant portion will be used to modernize a substantial segment of its fleet with the latest Gen4 electric bikes and scooters. Furthermore, the company intends to expand its operational footprint into additional cities and invest in the development of innovative technologies.

These technological advancements are designed to enhance Lime’s competitiveness in securing Requests for Proposals (RFPs) from municipalities.

Investor Confidence and Market Position

“This round was significantly oversubscribed, demonstrating a resurgence of interest in the micromobility sector,” Ting stated in an interview with TechCrunch. “More importantly, it validates Lime’s position as the clear leader in this evolving landscape.”

He further explained that convertible notes are frequently utilized as a final funding stage prior to an Initial Public Offering (IPO), with investors anticipating favorable terms upon the company’s transition to the public market.

Funding Breakdown and Key Investors

The funding round includes $418 million in convertible debt, spearheaded by Abu Dhabi Growth Fund, Fidelity Management & Research Company, Uber, and funds managed by Highbridge Capital Management. This debt will automatically convert into equity shares when Lime goes public.

An additional $105 million is provided as a senior secured term loan facility from UBS O’Connor’s private credit division. The specific terms of this loan have not been disclosed by Lime.

Existing Investor Support and Past Funding

Both Fidelity and Uber have been long-term investors in Lime. Fidelity played a key role in Lime’s $310 million Series D funding round in 2019. Last year, Uber led a $170 million down round for the company, coinciding with the acquisition of Uber’s own micromobility subsidiary, Jump, by Lime.

IPO Plans and Competitive Landscape

This funding announcement coincides with competitor Bird’s entry into the public markets through a Special Purpose Acquisition Company (SPAC) merger. While Ting did not specify a precise timeline for Lime’s IPO filing, sources indicate that a traditional IPO is favored over a SPAC merger.

Commitment to Sustainability and Decarbonization

“Our primary objective is to secure the capital necessary to achieve our mission: providing a shared, affordable, and environmentally friendly transportation alternative,” Ting emphasized.

Lime recently received validation of its carbon reduction targets from the Science-Based Targets Initiative (SBTi), an organization promoting emissions reduction best practices. The company is committed to aligning with the Paris Climate Accord and achieving net-zero emissions by 2030.

Investing in a Greener Future

A $20 million allocation from the funding round will be dedicated to decarbonization efforts, including investments in cleaner hardware and ensuring that 80% of its supply chain adopts improved emissions goals. According to Lime’s carbon targets report, capital goods account for 44.3% of the company’s total emissions, while pre-purchased goods and services contribute 25.8%.

Supply Chain Responsibility and Investor Expectations

Ting stated that Lime will prioritize partnerships with suppliers who demonstrate a commitment to reducing their carbon footprint, and will discontinue collaborations with those who lack such targets. He aims to demonstrate a genuine commitment to decarbonization, assuring future investors of the company’s core values.

Expanding Market Presence and Technological Innovation

Lime intends to leverage the funds to strengthen its existing city permits and deepen its relationships within current markets. This may involve introducing new vehicle types or investing in technologies that enhance its value as a partner to cities.

Profitability and Growth Trajectory

During a recent WSJ tech event, Ting revealed that Lime achieved EBITDA profitability for the second time in the third quarter. This profitability is largely attributed to efficient operations and bottom-line growth. However, the company acknowledges that COVID-19 continues to impact new ridership and overall revenue growth, despite launching 80 new contracts this year.

Recovery of Key Use Cases and Future Expansion

The primary use cases for Lime – commuting and tourism – are gradually recovering. The lifting of travel restrictions for vaccinated Europeans is expected to further boost demand. Lime is also targeting expansion into North America, Europe, and the Middle East, where its lead investor is located.

“We’ve experienced substantial growth in intercity travel, and our 2021 revenue is projected to return to 2019 pre-pandemic levels,” Ting noted. “Individuals are seeking safe, affordable, and single-passenger transportation options, and micromobility platforms like Lime are gaining traction.”