A Charleston firm that staked its ground on partnering with colleges and cities to rent electric bikes and scooters says it is being acquired in a deal valued at $12 million, including stock.
Gotcha, headquartered on Radcliffe Street in downtown Charleston, will be purchased by another ride-sharing company, Oxnard, Calif.-based OjO Electric.
Gotcha CEO Sean Flood said the fact that OjO is publicly traded appealed to him. It offers the possibility of raising capital without the aid of venture capital or buy-in from a much larger transportation company.
"It gives us the ability to raise money in a different way," Flood said.
Under the agreement, $6 million will be paid upfront. The rest is contingent on Gotcha meeting certain milestones, which OjO did not specify. The transaction is expected to close before the new year.
Gotcha's platform, available as an app on mobile phones, allows users to pick and rent one of its vehicles. Gotcha's fleet includes bikes, a scooter and an electric tricycle, among others. College campuses are its core business.
In Charleston, Gotcha operates the Holy Spokes bike-share system. Caroline Passe, a spokeswoman for Gotcha, said no immediate changes to Holy Spokes are expected. She said the city of Charleston will be consulted before any changes to the system are made. Flood said sometime next year, Gotcha expects to roll out motorized bicycles in Charleston.
The CEO also expects Gotcha to retain its branding.
Gotcha has forged partnerships with colleges and cities to allow the firm to operate its platform, so students and citizens can rent its vehicles. Gotcha ramped up those agreements from 20 at the end of 2018 to more than 100 in the first six months of this year. It also launched a subscription service that allows users to pay a monthly fee and ride for a set time each day.
But Gotcha began scaling back mid-year as it ran into problems with tariffs from China, where its vehicles are manufactured, along with technical issues with its software. A number of launches across the country were delayed. The firm pulled its vehicles out of Nashville and Atlanta, and it laid off roughly a quarter of its workforce.
Now, Flood said the team is an efficient size. He does not expect layoffs. Gotcha may make additional hires in the coming months in the markets where its vehicles are on the roads.
Flood will stay on board as Gotcha's CEO and expects to remain in Charleston, along with the rest of the Gotcha staff. Flood founded Gotcha in 2009 in Atlanta and moved the company to Charleston in 2014.
"I still fully believe in what we're doing at Gotcha and want to continue what we're doing," he said.
OjO, traded on the Toronto stock exchange, has been operating as a mobility company for roughly a year. It recently unveiled a seated scooter it launched in Memphis, Dallas and Austin. Its CEO, Max Smith, said in a press release the exclusive, long-term contracts Gotcha has secured were "particularly attractive." Both Gotcha and OjO prefer to operate in markets not littered with electric vehicle companies.
According to a press release Tuesday, Gotcha has exclusive, long-term contracts with 35 universities and 42 municipalities across the country. The combined company will still be smaller than electric scooter giants Bird and Lime.
"We did extensive homework to find the right partner to expand our presence while joining our mission to change rideshare for good," Smith said in the release. "Gotcha's strong corporate culture and experienced team make the company a perfect match for OjO."
It is the second major acquisition of the year in Charleston's burgeoning technology sector. Engage Talent, an artificial intelligence firm that helps companies recruit and retain employees, announced it had found a buyer in late October.