Bike rental company Tembici
Micromobility startup Tembici attracted one of the biggest deals of June. Photo: Tembici / Courtesy
Business

Brazilian Tembici raises $47 million to expand its micromobility business in Latin America

"We are their [World Bank Group's investment arm] first investment in micromobility in the world, and we are bringing this money to Latin America," says cofounder and CEO Tomas Martins

The micromobility sector has been facing quite a rough time recently in Latin America, with scooters startup Grow cutting staff and reducing operations in Brazil, due to financial impacts brought by the coronavirus. But for the Brazilian rental bike business Tembici, the moment is all about expansion. The startup has announced this Wednesday a $47 million Series B round led by the venture capital firms Valor Capital and Redpoint eventures.

Unlike the dockless solution of counterparts such as Grow and Lime, Tembici uses a docking station system for taking and returning the bikes, something similar to models like New York City’s Citi Bike and public system Vélib’, from Paris.

“The station creates a reference point for the user, this reference creates availability,” co-founder and CEO Tomás Martins tells me in an interview with LABS.

“It’s a system that makes a lot more sense for those who need to use the bike every day, bringing reliability and predictability. In addition, [dockless bikes and scooters] is a model that has much more theft, more operational cost,” adds Romero Rodrigues, Redpoint eventures managing partner.

Martins points out that within São Paulo, one of the major cities where Tembici runs, 70% of trips are up to 8km. “Every time I travel 8km, do I have to take with me 2 tons of aluminum with a car? Moving around the city could be much more fluid and efficient. We believe that bikes and electric bikes come in this direction.” The executive points out that Tembici’s system adoption grew more than ten times from 2017 to 2019, as more people started to use their bikes on a daily basis. This growing behavior shift in a market still untapped added to their goal of offering a transport mode, rather than an occasional vehicle, set Tembici’s context for raising this new round. 

“90% of the usage in São Paulo happens among weekdays during peak hours. It is actually a displacement for people’s mobility. This all brings a very strong growth trend and we have seen these numbers increase year on year,” he highlights. In addition to São Paulo, Tembici is also in four Brazilian major cities– Rio de Janeiro, Salvador, Recife, Porto Alegre–as well as in Buenos Aires, Argentina, and Santiago, Chile.

We have strong growth but is a construction, knowing that this is the city that we want to build for the future, that we will see in a few years.

Tomás Martins, co-founder and CEO at Tembici

The new resources will be focused on expanding the fleet in these cities, as São Paulo, Rio, and Porto Alegre, as he tells, have already more demand than bikes on the street. Another part will also address electric bikes. “We carried out a test project in São Paulo with 20 electric bikes, they ran three times more than the regular ones. We are very confident, they further extend the system’s reach for new users, different topographies, different distances.”

Cofounders Tomás Martins and Mauricio Villar founded Tembici in 2010 as a final degree project at the University of São Paulo. The startup is sponsored by Itaú, Brazil’s largest private bank. Photo: Tembici/ Courtesy.

Tembici is about to conclude its expansion plans for the next six months, but so far, sales hit a 50% growth from 2018 to 2019, more than 20 million trips, and 2 million per month. “We have 16,000 bicycles scattered in these cities. These bikes make 70,000 to 80,000 daily trips.”

Amid a scenario of social isolation measures, Martins says that the startup felt a great impact, as the total number of trips dropped. But they noticed two things: with delivery demand on the rise, people who need to commute, like couriers and front-line professionals, started to choose Tembici. “If you take our group of users from that period, we increased the number of user profiles. As other clusters resume the usage, demand will also increase.”

“For sponsors, Tembici is a unique opportunity for brands to join with what people understand to be an individual means of transport, which during Covid is important, besides being a transport mode without impact on the environment, with a positive impact on the design of cities, as it does not overload public transport logistics,” says Redpoint eventures managing partner Romero Rodrigues. Photo: Redpoint eventures/ Courtesy.

Sustainable concerns, sustainable business

But what could explain Tembici success within a sector that has been facing major issues in Latin America? “Our main point, which permeates our product and business model decisions, is to understand that this is a medium to long term change. People have been used to the automobile for more than 60 years, with public incentives, massive investments from the industry, building infrastructure for cars in cities in the last decades. We understood this from the beginning, people are more likely [to adopt bikes], but it will not happen overnight,” he ponders. 

If the behavioral shift is mid to long term, so is Tembici’s business. “Dialogue with society, projects in partnership with the government, products, and models designed to the medium-long term. This is a little of what we have defined here. On top of that, we set that our business had to be financially sustainable, profitable.”

Tembici is a service that reaches millions of users, the scooter models have reached thousands. It’s present in a great part of Latin America, and it will expand to more cities.

Romero Rodrigues, Managing Partner at Redpoint eventures

The strategy behind their business seems to be leading Tembici on the right path: in addition to Redpoint eventures and Valor, the new funding was also backed by the International Finance Corporation (IFC), a World Bank Group‘s investment arm. This is the first time ever that IFC raises money for a micromobility player, something that can leverage Tembici’s efforts to work along with public regulators.

“They [IFC] came in that sense, understanding their mission to create more sustainable cities for the future. We are their first investment in micromobility in the world, and we are bringing this money to Latin America, which is really cool,” Martins stresses. “It’s also about having partners to corroborate this thesis of creating a business that is financially sustainable, but that has also a huge impact on cities and people.”