Swing, a South Korean electric scooter and micromobility startup, announced today it has raised $24 million in a Series B round to spur its growth and expansion to Japan.
The funding was led by White Star Capital, which also invested in Berlin-based Tier Mobility, and included existing backer Hashed, among others. With the fresh capital, Swing has raised a total of approximately $33 million (40 billion KRW) since its inception in 2019.
Founder and chief executive officer of Swing San Kim told TC that the startup will use the proceeds to increase its fleet of micromobility and further penetrate the Japanese market. In 2022, Swing plans to deploy 100,000 e-scooters, e-bikes and e-mopeds that will have a swappable battery that’s interchangeable with each other and install 200 charging stations for its own usage and others as options. Swing currently operates a fleet of 35,000 electric vehicles, including e-scooters and e-mopeds.
Apart from its Swing app, the shared micromobility startup recently launched a new app called Dayrider that enables delivery riders to rent e-mopeds or e-scooters for just one or two days without the hassle of charging.
The city of Seoul announced in September that it will add 62,000 electric motorcycles, including e-mopeds, and install 200,000 additional electric charging stations by 2025 in an effort to reduce greenhouse gas emissions. Seoul also said it would replace 100% of the 35,000 motorcycles used for delivery services with electric motors.
Swing aims to take the market. According to the company, there is no suitable e-moped model that can meet the required demand in South Korea, no supply chain that can sell, repair or resell and no charging stations that offer services to potential e-mopeds users.
When it comes to operations, Swing has taken a franchise model. Chief operating officer of Swing Jason Shin said Swing, with the franchise model, could expand its fleets faster with smaller capital than its peers. Swing sells its branded fleets to franchisees. Then the franchisees charge and maintain the e-scooters using Swing’s proprietary software. Swing currently has more than 50 franchise partners, Kim said.
“No one doubted the market potential. The problem was who will win the competition. Rather than pouring investors’ money on the ground, our strategy was to build a strong internal operation team to make sure each scooter makes a positive return, which has worked,” said Shin.
Although Swing has generated net profits since its second year of operations, it could not meet its aimed numbers as expected, Kim said. He added that the ridership of new users has dropped in the wake of last year’s tightened regulation on e-scooters.
South Korea’s revised rules on e-scooter have hurt e-scooter companies in the country. Under the amended Road Traffic Act, which came into effect in May 2021, e-scooter riders must be 16 years of age or over, have a valid driver’s license and wear a helmet. If the users fail to follow the new regulations, they will be imposed a fine. The e-scooter users also must use bike paths and park the e-scooters away from people and cars. In July, the city of Seoul announced it would tow illegally parked e-scooters and charge a penalty.
More than 20 e-scooter rental companies are currently operating in South Korea, where there is no limit on the number of fleets or companies that can run the business in the sector. Industry sources told TC that consolidation started in the e-scooter industry last year. Berlin-based e-scooter platform Wind Mobility, which entered the South Korean market two years ago, shut down its operation in Seoul last October.
Expansion to Japan
Last year, the startup set up a subsidiary in Japan, aiming to launch its service in Tokyo in the first half of 2022.
Kim said customers and cities in Japan are optimal for e-scooters, with its high smartphone penetration rate, e-bike usage and huge demand for the last-mile trip due to the distance between stations.
“Last year, the Japanese government opened the door to legally start e-scooter sharing through proof of concept. As a Seoul-based startup, Swing can lead the micromobility adoption in Japan through our operational excellence and accumulated data in a very similar environment,” Kim said.
“We are at an exciting point of time with e-scooters in the Japanese market, where the government is conducting proof-of-concept projects to fine-tune its guidelines and regulations ahead of a proper launch. This exciting partnership between White Star Capital and Swing will be extremely beneficial for Japanese stakeholders who would have access to Swing’s technological capabilities as well as operational knowledge they have built over the years in Korea. Last-mile logistics remains a challenge in Japan, and we look forward to helping Swing address these issues and to bring a better mobility experience for users, riders, businesses and the public sector counterpart,” said Shun Nagao, venture partner of White Star Capital said.
“Mobility has been a big focus for us as we’ve been fortunate to partner with leading companies such as Tier Mobility and Finn Auto in Europe. Robust guidelines and regulations developed in close partnership with leading companies set the stage for Europe to embrace tech-native mobility and its positive environmental impact. We see South Korea and Japan closely following this trend and anticipate micromobility to reach a critical inflection point in the next few years,” said Eddie Lee, partner of White Star Capital. “White Star Capital will be working very closely with San and his team to support Swing’s ambitious vision to become a global company through entering Japan and growing its logistics capabilities with the new Dayrider business.”
Swing has more than 100 employees in South Korea and four people in Japan.
