Scott Ball / Rivard Report
San Antonio’s homegrown e-scooter company Blue Duck Scooters announced last week another multimillion-dollar round of funding, supporting its forthcoming purchase of more than 12,000 new vehicles.
But as it eyes new markets in which to expand, Blue Duck faces an uncertain future in San Antonio. The number of companies operating in the city continues to rise with Uber’s e-scooter and e-bike enterprise, known as Jump, stepping in on Tuesday. The already crowded local scene comprises five companies and more than 14,000 approved vehicles, with potentially more on the way. Blue Duck, meanwhile, maintains an almost nonexistent local operation, having lost ground to its well-financed competitors.
Of the six companies that applied for a permit to operate in San Antonio, Blue Duck is the only application pending approval, according to a City spokeswoman. The company applied to operate 100 scooters during the pilot program. It was grandfathered into the program, however, as one of the first operators in the city.
“The scooter wars, as I like to call them, have gotten completely out of control,” said Eric Bell, Blue Duck’s co-founder and president. “I can’t tell you what the balance sheet of everyone in town is, but I can assure you there is a zero-percent chance that any of these people are bringing returns back to their investors from being in San Antonio.
“It’s created a situation where we can almost not even operate here. We can’t raise [capital] here and we can’t operate here, which is totally counterintuitive to everything we’ve talked about in the San Antonio venture community for generations.”
Blue Duck raised $5 million from a private investor over the holidays. The company’s valuation doubled from $75 million in its previous funding round to $150 million in the latest deal. This is Blue Duck’s fourth funding round since it was founded in early 2018. Many of those investing have been private, but only one has been from San Antonio: Bell’s family, whose patriarch Paul founded an energy-focused holding company and an allergy testing services company. Paul Bell also serves as co-founder and executive chairman for Blue Duck.
The rest of Blue Duck’s capital has come from investors in Austin, California, and London, Eric Bell said.
In addition to the 12,000 new scooters, Bell said the company has tens of thousands of units in production. The first batch – a few hundred – of the company’s next-generation vehicle, dubbed the Blue Duck II, is slated to arrive this week, said Elizabeth Houston, chief marketing officer.
The market, Bell said, is beginning to shift from lightweight but not very durable scooters to more robust vehicles.
“It’s changing pretty positively for end users,” he said. “Stronger, heavier, more durable vehicles are safer. … What is valuable to us as a company is also going to be valuable to the end user.”
Houston said the company aims to provide a safer ride with reflective paint that makes the scooters more visible. The scooters also are heavier than the previous generation, a fleet of several hundred vehicles the company plans to retire over the next month or so.
Bell said the company has revamped its technology, including the front and back end of its smartphone app, the software that controls its vehicles, and the hardware itself.
Blue Duck has been on a hiring spree, the company said, with a workforce of hundreds of full-time, part-time, and contract employees, its staff growing at a rate of one person a day. New hires have ranged from high-paying technical roles to drivers and mechanics, Bell said, adding that hiring talent is part of the “bet” the company is making on building a valuable enterprise.
“We went all in on people,” he said. “I always felt that that was going to be the driver and the enabler for true longevity and true prosperity for the company, for its stakeholders, and for its employees. So far, that’s turned out to be demonstrably true.”
The boost in workforce and its scooter fleet will help the company in its quest to enter one to three new markets a month this year, Houston said.
“We have a huge appetite for growth,” Bell said. “We also have to be realistic and responsible about how we do that.”
Last year, Blue Duck launched operations in San Marcos near the Texas State University campus and in Georgetown on the Southwestern University campus, but the universities quickly booted the company – impounding their vehicles and restricting them from operating there. Blue Duck did not communicate with university officials prior to releasing vehicles near those campuses.
The company says it has learned from those experiences, which Bell called a “test,” and is now predicated on working with cities and universities before rolling out services in a new market.
Blue Duck this week received its license to operate within Corpus Christi, where it has been offering its services for the past few months.
In order to ramp up its local operations, though, the company hopes to see tightened regulations, including caps on the number of vehicles each company is permitted to operate. Bell said Blue Duck will work with the City to put a permanent regulatory framework in place after the six-month dockless vehicle pilot program concludes in April.
For Houston, the way the City has overseen the fledgling dockless electric vehicle industry seems like an overcorrection in response to its 2014 handling of the rideshare industry. The City Council had enacted laws that Uber and Lyft saw as draconian, and the two main players in the rideshare market soon left San Antonio. The City then reversed course the following year, loosening its regulations to lure the companies back.
“I think that what happened is that was so far on one end of the spectrum and what we’re seeing now is so far on the other end of the spectrum,” Houston said. “We would love to work with the City to find that happy medium so that we can have this as a long-term sustainable … form of transportation. We believe in it, but if it’s abused and companies aren’t being responsible in terms of what they’re putting out there and what they’re maintaining, it won’t sustain itself.”