New York City, home to over 60,000 gig delivery workers, has been cracking down on cheap, uncertified e-bikes that have resulted in battery fires<\/a> across the city.\u00a0<\/p>\n Some e-bike providers may see such regulations as a problem for business. But e-bike subscription startup Whizz<\/a> sees it as an opportunity.\u00a0<\/p>\n \u201cI think the market is moving from a Wild West to a mature market,\u201d Mike Peregudov, CEO and co-founder at Whizz, told TechCrunch. \u201cWe\u2019re lucky to be here in this moment because after all the regulations happen, it will be very hard to enter this market.\u201d<\/p>\n The New York-based startup claims to offer gig workers access to safe, high-quality e-bikes for between $139 and $149 per month. Couriers for Grubhub and DoorDash, Whizz\u2019s official partners in NYC, can access subscriptions and rent-to-own schemes for 15% off. Subscriptions include service, maintenance, anti-theft protection and more.\u00a0<\/p>\n Founded in 2022, Whizz this week raised $12 million to build more e-bikes, begin producing e-mopeds and expand beyond New York to other cities, including Boston, Chicago, Miami, Philadelphia and Washington, D.C. The round was broken into $5 million in equity led by Leta Capital and $7 million in debt from Flashpoint VC.\u00a0<\/p>\n Ultimately, Whizz wants to launch nationwide. In the short-term, the startup aims to manage 40,000 e-bikes in the NYC area over the next three years, up from the 2,500 e-bikes Whizz currently has deployed across NYC and Jersey City.\u00a0<\/p>\n There are few players in the e-bike subscription space in the U.S. Whizz\u2019s main competitor is Zoomo<\/a>, an Australian startup with a presence in NYC and a handful of European cities. Zoomo\u2019s subscription costs, on average, are about $49 per week or just under $200 per month. Uber Eats couriers<\/a> get a better deal at $24 per week, or just under $100 per month. Zoomo also works with enterprise customers to provide entire fleets.\u00a0<\/p>\n The lack of disruption in the e-bike subscription arena could mean that Whizz is in a perfect position to get a first-mover advantage. Or it could mean that the e-bike subscription model is difficult to get right.<\/p>\n Other consumer-facing micromobility subscriptions<\/a> in NYC have come and gone, like Beyond\u2019s e-scooter rental offering<\/a> and charging infrastructure company Revel\u2019s attempt at an e-bike subscription<\/a>. And as we\u2019ve seen from the many failures of shared micromobility companies like Bird<\/a> and Superpedestrian<\/a>, hardware-as-a-service (HaaS) is a high-capital expenditure business. That doesn\u2019t always square up to the most attractive aspect of subscriptions: an affordable price point. The combination of the two opposing forces often translates to unimpressive margins.\u00a0<\/p>\n On the other hand, subscriptions have the benefit of repeat revenue, which can be leveraged to improve margins as long as a company keeps operations lean and efficient.<\/p>\n Whizz says this is where it can shine. The startup has relied on its proprietary software that streamlines operations and a culture of bootstrapping to grow 3.5x year-over-year and reach an annual recurring revenue (ARR) of more than $8 million as of May. ARR is a projection of revenue for the year based on current and expected customer numbers.\u00a0<\/p>\n Peregudov also says Whizz will be EBITDA positive in two to three months and fully profitable within nine months.\u00a0<\/p>\n The CEO and his co-founders all came to New York from Russia a few years ago after founding and selling subscription-based businesses. Peregudov built Partiya Edy, a meal-kit delivery service, and sold it to Yandex<\/a> in 2019 for $25 million. His co-founders \u2014 Alex Mironov,\u00a0Ksenia Proka, and Artem Serbovka \u2014 built and sold an e-bike subscription platform, Moy Device, to a private equity firm in Russia.<\/p>\n \u201cWe never raised hundreds of millions, and I think in this type of business, that could be dangerous,\u201d\u00a0 Pergudov said. \u201cWe\u2019ve seen companies that have raised $100 million and then they try to blitzscale. This business is not about blitzscaling.\u201d<\/p>\n Peregudov says the most important part of Whizz\u2019s business is its proprietary \u201centerprise resource management\u201d (ERP) system, the software that powers the back-end and protects Whizz\u2019s assets. The CEO says this software helps Whizz cut costs by 35%, achieve a 85% fleet utilization rate and \u201cimprove margins at every step.\u201d\u00a0<\/p>\n The software provides analytics on everything from how much time it takes to complete a repair to how IoT can help manage warehouse logistics, from information on all bikes and customers in the system to revenue and payments management. Whizz\u2019s system can even remotely control parts of the bikes to brick them if they get stolen.\u00a0<\/p>\n Another aspect of Whizz\u2019s software is its internal scoring model, which the startup uses to ensure it\u2019s renting bikes to responsible people. \u201cThis scoring system is AI-enabled with more than 50 parameters, and it\u2019s like a bank credit score,\u201d Peregudov said. \u201cThese guys are mostly immigrants, and we are probably the only company on the market that can score them because banks don\u2019t do that. That\u2019s why these guys don\u2019t have credit scores. Our bikes are often the only option for affordable transportation for them.\u201d<\/p>\n Whizz\u2019s e-bikes are also designed in-house specifically to service food delivery workers. Peregudov claims the bikes are reliable enough to ride for up to 1,000 miles per month and have large batteries to enable couriers to drive more, and thus, earn more. The batteries, he says, are UL certified and built with Samsung cells.\u00a0<\/p>\n Gig workers in NYC can visit one of Whizz\u2019s five hubs to pick up bikes and have them repaired or replaced in 30 minutes or less. The hubs are located in Midtown, Union Square, Harlem and Brooklyn, with a fifth coming this week to Jersey City.\u00a0<\/strong><\/p>\n Whizz also says it offers customer service in six languages: English, Spanish, French, Turkish, Arabic and Russian. While the e-bike subscription market geared at gig delivery workers is still new, it\u2019s not a guarantee that Whizz will be able to scale in the U.S.. Zoomo, the incumbent, as it were, has a respectable presence in Europe, but its market share in the U.S. has recently shrunk. The startup used to offer its services in San Francisco, but shuttered there in 2022. Zoomo did not respond to TechCrunch to explain what went wrong.\u00a0<\/p>\n Whizz\u2019s strategy for expansion is twofold: Work its way down the East Coast before expanding nationally; and offer new form factors to reach a broader range of delivery workers.\u00a0<\/p>\n Whizz\u2019s latest funding round will help get the company part of the way by taking more territory in NYC and building a new e-moped. In the long run, the startup sees itself even potentially bringing EVs onto the platform for delivery workers who don\u2019t live in bike-friendly cities, which are few and far between in the U.S.\u00a0<\/p>\n Sergey Toporov, a partner at Leta Capital who led Whizz\u2019s equity round, said he invested in the startup because it was able to achieve a great contribution margin on a small scale.\u00a0<\/p>\n Toporov noted that Leta mainly invests in software companies, so Whizz\u2019s ERP system is what appealed the most because it will help the company stay efficient and organized as it scales its fleet, customers and employee base and brings on new types of vehicles.\u00a0<\/p>\n \u201cThe hype around micromobility and fast delivery has passed, and most VCs have pivoted to other industries. However, we strive to focus on companies with fundamental business value in the markets not inflated by an excess of capital,\u201d Toporov said. \u201cWe believe that Whizz is a hidden gem that will continue to surprise the market.\u201d<\/p>\n<\/div>\nUsing software to improve unit economics\u00a0<\/strong><\/h2>\n
![\"Hands](\"https:\/\/techcrunch.com\/wp-content\/uploads\/2024\/06\/Whizz-Platform-Screen.jpg?w=680\")
Quality e-bikes, batteries and service<\/strong><\/h2>\n
![\"Whizz](\"https:\/\/techcrunch.com\/wp-content\/uploads\/2024\/06\/Whizz-Co-founders.-Left-to-right-Alex-Mironov-Artem-Serbovka-Ksenia-Proka-Mike-Peregudov.png?w=680\")
The major snag in Whizz\u2019s future plans is the fact that its bikes and batteries are all assembled in China. The Biden administration recently announced new tariffs on Chinese imports, including e-bikes and batteries, which will be subject to a 25% price hike.<\/a> Peregudov says he\u2019s not worried because Whizz owns its IP and can move production to a new partner in India or Vietnam.<\/p>\nCan Whizz\u2019s model scale across the U.S.?<\/strong><\/h2>\n