Zagster, Bike Sharing Startup, Raises $3.5 million in Series A funding

By | July 3, 2015

Zagster, a leading public-private bike sharing startup, announced it raising $3.5 million in a Series A round of funding led by the existing investors LaunchCapital, Fontinalis Partners, Clean Energy Venture Group, LaunchPad Venture Group, a new investor Otter Consulting and other leading Boston-area angel investors.


Massachusetts-based Zagster founded in 2007 by Tim Ericson provides bike sharing as a service to private entities. Zipcar-like bike service is now available in 50 cities and it focuses on corporate and college campuses and the underserved municipalities. Corporate clientele includes General Motors, Samsung and Quicken Loans, universities like Ohio State, Duke, Yale and Princeton, hotels like Hyatt and The Four Seasons and cities like Cleveland and Albuquerque.
CEO and co-founder Ericson said, “With more than 75 programs in 50 cities in 28 states, Zagster is the fastest growing bike sharing in the country. He also added, “There’s incredible demand for bike sharing in places that simply cannot be served by the large, city-wide programs and we are the only company capable of meeting that demand with our low-cost, scalable, turnkey model.”

Fontinalis Partners’ Chris Cheever in research by consulting firm Roland Berger quoted that estimated the global bike-sharing market will reach $6.3 billion by 2020. He believes that ‘growth potential is even more impressive’ for Zagster which is taking in the concept of private assets holders like schools and corporations.
Rather than manufacturing its own bikes, the startup sources bike and other hardware from a third-party providers, including Fuji Bikes. The bikes are customized with smartlocks, GPS and other Web-connected technology based on what the customers ask for. The rates range from $100 to $150 per bike per month for bike-sharing programs on college and corporate campuses. Corporate clients offer the bikes to their employees, customers, students or other constituents for various reasons.
The software used in the startup plays a major role for its operations. The software is used for fleet management or the tracking of and reporting on the utilization of the bikes by a given organizations. It helps the organizations to evaluate the returns on the investment in a bike-share program through Zagster’s reports.
Furthermore, Zagster’s model of public-private sponsorship is permitting expansion and stepping into cities like Cleveland and Canton (Ohio), Albuquerque, Carmel and Montgomery County, which would not have bike sharing programs or else. The startup is planning to use its new funds for the same and enter geographically diverse markets in the US and Canada.
“Zagster has shown that it can apply the elements of a high growth, tech-enables business into what has been a capital-intensive industry,” said Bill McCullen, CIO of Launch Capital. He also added, “As a result, they are growing faster and serving more customers and partners – the type of trajectory that we like to see in our investments.” The simplicity, agile, flexible and easy-to-upgrade technology allows Zagster to be set up almost everywhere, unlike many other city-wide program that are complicated and expensive.
“We see a lot of opportunities in the next-generation mobility space, including bike sharing and we were attracted to Zagster’s long-term, financially viable business model that helps open up bike sharing to previously underserved segments of the market,” said Cheever. “Zagster has been able to do what no one else in the bike sharing space has done. – be able to show a return on investment and a pathway to long-term sustainability of bike share programs. It is a major step forward for the industry,” he added.
Zagster also provides its members with mobile phone unlock-the-bike facility during the time of the trip. It is the same lock that locks the bike to the host location can be used to lock the bike during the trip. This is not allowed in most of the bike programs as it requires the bikes to be locked at official docking stations. As the member finishes the trip, he can return the bike to a Zapster location, and end the reservation through the mobile app or even a simple text message to Zagster.