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Whiz wants to own the e-bike delivery subscription space, starting in NYC

New York City, home to more than 60,000 concert delivery drivers, is cracking down on cheap, uncertified e-bikes that have resulted in battery fires around the city.

Some e-bike suppliers may see such regulations as a business problem. But the start of the e-bike subscription Whiz see it as an opportunity.

«I think the market is moving from the Wild West to a mature market,» Mike Peregudov, CEO and co-founder of Whizz, told TechCrunch. «We’re happy to be here at this point because after all the regulations it’s going to be very difficult to break into this market.»

The New York-based startup claims to offer gig workers access to safe, high-quality e-bikes for between $139 and $149 a month. Couriers for Grubhub and DoorDash, Whizz’s official partners in New York, can access subscriptions and rent-to-own schemes at a 15% discount. Subscriptions include service, maintenance, theft protection and more.

Founded in 2022, Whiz raised $12 million this week to build more e-bikes, start e-moped production and expand beyond New York to cities including Boston, Chicago, Miami, Philadelphia and Washington, D.C. The round was split into $5 million capital led by Leta Capital and $7 million in debt from Flashpoint VC.

Ultimately, Whiz wants to launch nationwide. In the short term, the startup aims to operate 40,000 e-bikes in the NYC area over the next three years, up from the 2,500 e-bikes Whiz currently has in NYC and Jersey City.

There are few players in the e-bike subscription space in the US, Whizz’s main competitor is Let’s zoom, an Australian startup with a presence in New York and several European cities. A Zoomo subscription costs an average of about $49 per week, or just under $200 per month. Uber Eats couriers get a better deal for $24 per week or just under $100 per month. Zoomo also works with enterprise clients to secure entire fleets.

The lack of disruption in the e-bike subscription arena could mean Whiz is perfectly positioned to gain first-mover advantage. Or it could mean that the e-bike subscription model is hardly right.

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Others are consumer oriented micromobility subscriptions in NYC they came and went, like Beyond’s e-scooter rental bid and charge infrastructure company Revel tries e-bike subscription. And as we have seen from the many failures of micromobility joint ventures like Bird and Super pedestrian, hardware as a service (HaaS) is a capital-intensive business. This is not always consistent with the most attractive aspect of the subscription: the affordable price. The combination of two opposing forces often translates into unimpressive margins.

On the other hand, subscriptions have the benefit of recurring revenue, which can be used to improve margins as long as the company keeps operations lean and efficient.

Whiz says he can shine here. The startup has relied on its proprietary software that streamlines operations and startup culture to grow 3.5x year-over-year and reach annual recurring revenue (ARR) of more than $8 million as of May. ARR is a revenue projection for the year based on the current and expected number of customers.

Peregudov also says that Whiz will be EBITDA positive in two to three months and fully profitable in nine months.

Peregudov and his co-founders came to New York from Russia several years ago after founding and selling subscription-based companies. Peregudov built Paritya Edy, a meal package delivery service and sold to Yandex in 2019 for $25 million. Its co-founders — Alex Mironov, Ksenia Proka and Artem Serbovka — built and sold an e-bike subscription platform, Moy Device, to a private equity firm in Russia.

«We have never raised hundreds of millions, and I think in this type of business it could be dangerous,» Pergudov said. “We’ve seen companies that raised $100 million and then tried to scale quickly. This business is not a flash increase.”

Using software to improve unit economics

Hands on an open Apple laptop displaying Whizz's management software.
Whizz’s software manages the backend to help the e-bike subscription startup achieve strong unit economics.
Image credits: Whiz

Peregudov says the most important part of Whizz’s business is its proprietary Enterprise Resource Management (ERP) system, the software that runs the back-end and protects Whizz’s assets. The CEO says the software is helping Whiz cut costs by 35%, achieve an 85% fleet utilization rate and «improve margins at every turn.»

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The software provides analytics on everything from the time it takes to complete a repair to how IoT can help manage warehouse logistics, from information about all bikes and customers in the system to revenue and payment management. Whizz’s system can even remotely control bike parts to lock them up if they’re stolen.

Another aspect of Whizz’s software is its internal scoring model, which the startup uses to ensure it rents bikes to responsible people. «This scoring system is powered by AI with more than 50 parameters, and it’s like a bank credit score,» Peregudov said. «These guys are mostly immigrants, and we’re probably the only company on the market that can evaluate them because banks don’t do that. That’s why these guys have no credit scores. Our bikes are often their only option for affordable transportation.»

Quality e-bikes, batteries and service

Whiz co-founders (Left to right): Alex Mironov;  Artem Serbovka;  Ksenija Proka;  Mike Peregudov
Whiz co-founders (Left to right): Alex Mironov; Artem Serbovka; Ksenija Proka; Mike Peregudov
Image credits: Whiz

Whizz’s e-bikes are also designed in-house specifically to cater to food delivery customers. Peregudov claims the bikes are reliable enough to be ridden up to 1,000 miles a month and have large batteries that allow couriers to ride more and therefore earn more. The batteries, he says, are UL certified and made from Samsung cells.

Concert workers in New York City can visit one of Whizz’s five hubs to pick up bikes and have them repaired or replaced in 30 minutes or less. Centers are located in Midtown, Union Square, Harlem and Brooklyn, with a fifth coming this week to Jersey City.

Whiz also says it offers customer support in six languages: English, Spanish, French, Turkish, Arabic and Russian.
A major obstacle in Whizz’s future plans is the fact that its bikes and batteries are assembled in China. The Biden administration recently announced new tariffs on Chinese imports, including e-bikes and batteries, which will be subject to 25% price increase. Peregudov says he is not worried because Whiz owns its IP and can move production to a new partner in India or Vietnam.

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Can Whizz’s model scale across the US?

While the delivery e-bike subscription market is still new, that’s no guarantee that Whiz will be able to expand in the US. Zoomo, the leader, has a respectable presence in Europe, so to speak, but its market share in the US has recently declined. The startup offered its services in San Francisco, but closed there in 2022. Zoomo did not respond to TechCrunch to explain what went wrong.

Whizz’s expansion strategy is two-fold: break through the East Coast before expanding nationally; and offer new form factors to reach a wider range of shippers.

Whizz’s latest round of funding will help the company become part of the way by taking more territory in New York and building a new e-moped. In the long term, the startup even sees itself as potentially bringing electric vehicles to the platform for delivery drivers who don’t live in bike-friendly cities, which are few and far between in the US

Sergey Toporov, a partner at Leta Capital who led Whizz’s capital round, said he invested in the startup because it was able to achieve a large contribution margin on a small scale.

Toporov noted that Leta mainly invests in software companies, so Whizz’s ERP system is what appealed the most because it will help the company stay efficient and organized while growing its fleet, customer and employee base, and bringing in new types of vehicles.

“The hype around micromobility and fast delivery has passed, and most VCs have turned to other industries. However, we tend to focus on companies with core business value in markets that are not bloated with excess capital,” said Toporov. «We believe Whiz is a hidden gem that will continue to surprise the market.»

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