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

New York City, home to more than 60,000 delivery drivers, has cracked down on cheap, uncertified e-bikes that have sparked battery fires across the city.

Some e-bike providers may see such regulations as a problem for business. But start an e-bike subscription Zoef sees it as an opportunity.

“I think the market is evolving from a Wild West to a mature market,” Mike Peregudov, CEO and co-founder of Whizz, told JS. “We are fortunate to be here at this time because after all the regulations are implemented, it will be very difficult to enter this market.”

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's official partners in NYC, have access to subscriptions and rent-to-own programs at a 15% discount. Subscriptions include service, maintenance, anti-theft protection and more.

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

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

There are few players in the e-bike subscription space in the US, Whizz's main competitor Zoomo, an Australian startup with a presence in NYC and a handful of European cities. Zoomo's 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 corporate customers to deliver entire fleets.

The lack of disruption in the e-bike subscription space could mean Whiz is in a perfect position to gain a pioneering advantage. Or it could mean that the e-bike subscription model is difficult to realize.

Other consumer-oriented micromobility subscriptions in NYC have come and gone Beyond's e-scooter rental infrastructure company Revel's attempt to offer and charge an e-bike subscription. And as we've seen from the many failures of shared micromobility companies like Bird and Superpedestrian, hardware-as-a-service (HaaS) is a capital-intensive business. That doesn't always correspond with the most attractive aspect of subscriptions: an affordable price. The combination of the two opposing forces more often than not 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 a company keeps operations smooth and efficient.

Whiz 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 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.

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

Peregudov and his co-founders all came to New York from Russia a few years ago after founding and selling subscription-based businesses. Peregudov built Paritya Edy, a meal kit delivery service, and sold it 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 that can be dangerous in this kind of business,” Pergudov said. “We've seen companies raise $100 million and then try to scale. This company is not about blitzscaling.”

Using software to improve unit economics

Whizz's software manages the back-end to help the e-bike subscription startup achieve strong unit economics.
Image credits: Zoef

Peregudov says the most important part of Whizz's business is its own enterprise resource management (ERP) system, the software that powers the back-end and protects Whizz's assets. The CEO says this software helps Whiz reduce costs by 35%, achieve an 85% fleet utilization rate and “improve margins every step of the way.”

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 about all bikes and customers in the system to revenue and payment management. Whizz's system can even remotely control parts of the bikes to lock them if they are 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 AI-enabled and has more than 50 parameters, and it is like a bank credit score,” Peregudov said. “These guys are mostly immigrants, and we're probably the only company in the market that can score them, because banks don't do that. That's why these guys have no credit scores. Our bicycles are often the only option for affordable transport for them.”

High-quality e-bikes, batteries and service

Whiz co-founders (from left to right): Alex Mironov;  Artem Serbovka;  Ksenia Proka;  Mike Peregudov
Whiz co-founders (from left to right): Alex Mironov; Artem Serbovka; Ksenia Proka; Mike Peregudov
Image credits: Zoef

Whizz's e-bikes are also designed in-house, especially for food delivery companies. Peregudov claims the bikes are reliable enough to travel up to 1,000 kilometers per month and have large batteries that allow couriers to drive more and therefore earn more. He says the batteries are UL certified and built with Samsung cells.

Employees in NYC can visit any of Whizz's five hubs to pick up bikes and have them repaired or replaced in 30 minutes or less. The hubs are in Midtown, Union Square, Harlem and Brooklyn, with a fifth coming to Jersey City this week.

Whiz also says it offers customer service in six languages: English, Spanish, French, Turkish, Arabic and Russian.
The biggest problem in Whizz's future plans is the fact that the 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 Price increase of 25%. Peregudov says he's not worried because Whiz owns his IP and can move production to a new partner in India or Vietnam.

Can Whizz's model scale in the US?

While the e-bike subscription market aimed at gig delivery drivers is still new, this is no guarantee that Whiz will be able to scale in the US. Zoomo, the incumbent, has a respectable presence in Europe, so to speak, but its market share in the US has shrunk recently. The startup used to offer its services in San Francisco, but closed there in 2022. Zoomo did not respond to JS to explain what went wrong.

Whizz's strategy for expansion is twofold: work its way up the East Coast before expanding nationally; and offering new form factors to reach a wider range of delivery providers.

Whizz's latest round of funding will help the company go a long way by taking on more territory in New York and building a new e-moped. In the long term, the startup may even see itself 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 equity round, said he invested in the startup because it could achieve a large contribution margin on a small scale.

Toporov noted that Leta mainly invests in software companies, so Whizz's ERP system appealed the most because it will help the company stay efficient and organized as it expands its fleet, customers and employee base and introduces new types of vehicles.

“The hype around micromobility and fast delivery is over and most venture capital firms have focused on other industries. However, we aim to focus on companies with fundamental business value in markets that are not inflated by excess capital,” Toporov said. “We believe Whiz is a hidden gem that will continue to delight the market.”

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