Micromobility is the future of urban transportation, according to Deloitte. Electric scooters, shared bikes, and other miniature vehicles “have the potential to better connect people with public transit, reduce reliance on private cars, and make the most of existing space by “right-sizing” the vehicle, all while reducing greenhouse gas emissions.”

Our understanding of short-distance travel has been reinvented in the last few years by companies like Uber, Lyft, Bird, and Lime. In just over a year, Bird was generating $65 million in annual revenue renting electric scooters to users in cities nationwide. 

After enjoying their newfound ability to scoot around cities and neighborhoods, consumers are wondering how to purchase their very own electric scooter. Bird recognized the demand for direct-to-consumer scooter sales in 2019 and began selling vehicles online. But Bird and it’s scooter-sharing competitors are not focused on manufactured scooter sales as a primary vertical of their businesses. Is there room for a focused scooter production company to win market share with both consumers and brands?

Phat Scooters is a scooter manufacturing company selling high-end electric scooters to both consumers and businesses. Phat Scooters are distinctive: their large tires, seats, and wide footboards differentiate them from standard, slim, stand-up only scooter designs. 

The most basic Phat Scooter retails for $1,295. The company’s most expensive option (a scooter meant for the golf course with a place to store clubs) sells for $3,650, and additional models fall in the $2,000-$3,000 range. Scooters are eligible for a wide variety of customizations, from footboard graphics and fender colors to speakers, LED underlighting, and tire upgrades. 

While Phat’s range of scooter and customization options appeal to consumers, the company also generates significant revenue by selling to companies. Brands can customize a fleet of Phat scooters as promotional tools or to provide transportation for customers or employees. Perhaps the largest portion of Phat’s B2B sales, though, are to golf courses. Golfers are reimagining on-course transportation and choosing single-rider scooters over the traditional golf cart. Therefore, golf courses purchase branded fleets of scooters from Phat to accompany or replace their cart fleet. 

Phat manufactures all of its own scooters in a newly-purchased manufacturing center in Phoenix, AZ. The company is investing heavily in building out supply chain and manufacturing resources to ensure that inventory is always in stock across the Phat product line. The company has turned away significant order volume in the last year due to inventory shortages. 

Phat Scooters was founded in 2017 and has posted 300% growth since this time last year. The company generated over $2.7 million in revenue in 2019 — almost $2 million in prospective revenue was lost due to inventory delays. Last year, the company operated at a net loss of $781,843. 

Phat Scooters was co-founded by Peter Johnson, currently the company’s CEO. Johnson was previously the President of Eco Aluminum Pallets. He has 15 years of experience in product production, design, and sales, specifically for manufacturing-oriented businesses. 

Derrick Mains, the company’s President, has scaled over 140 companies during his 25-year career. He has served in executive roles at several past companies and serves as a management consultant for a number of other businesses. Phat’s COO is Richard Johnson, a fabrication and manufacturing specialist with experience overseeing 6 production facilities. 

Phat Scooters’ most urgent need is investing in inventory production to better meet consumer and B2B demand. The company has supposedly let millions in revenue slip by due to inventory delays. It intends for its new in-house manufacturing facility in Phoenix to remedy these supply chain issues. Capital raised on Wefunder is almost solely intended to support inventory and manufacturing, including build-out costs, motor engineering, and plastic molds. 

In 2021, Phat Scooters is launching a six-episode documentary series, “Riding Phat,” in partnership with Sony Entertainment. The show will feature Phat Scooters’ founders as they grow the business and will be distributed via Crackle to over 26 million subscribers. Note that Riding Phat LLC, the production arm overseeing this series, is a separate entity wholly owned by Phat Scooters. This series is presumably intended to grow Phat Scooters’ brand recognition among consumers.

Phat Scooters displays both positive and negative signals for prospective investors to consider, which balance out to a Neutral rating. 

On the positive side, the company has generated significant revenue in just three years of operation. Phat Scooters offers a number of product types that are highly customizable. It has also recently invested in an in-house production facility to further control supply chain toward future product development. In addition, Phat Scooters has diversified revenue streams to include both consumer business and also revenue from brands and golf courses. The benefits of this diversification were made clear during the coronavirus pandemic of 2020, when consumer demand for electric scooters presumably declined but Phat still generated significant revenue from booming golf courses. 

On the other hand, the company manufactures high-end products that appeal to a specific consumer niche — the average American is not going to spend $2-3k on an electric scooter. While consumer sales are not Phat’s core focus, the pool of companies and golf courses willing to invest in an expensive electric scooter fleet is also finite. Moreover, Phat is competing against established electric scooter companies like Bird, who offers a $600 electric scooter that provides the same easy mobility as Phat’s models. Put simply, Phat is betting that there is a large market for a vehicle somewhere between a lightweight electric scooter and a motorcycle. While the company’s success has proven that there is some consumer demand for this niche, it is unclear whether Phat has already fulfilled the majority of interest. 

Phat Scooters has generated impressive revenue from its range of high-end electric scooters, and the creation of an exclusive Phat Scooters production facility will better position the company to take advantage of demand. However, Phat Scooters’ products are niche: they appeal to a narrow, wealthy slice of Americans and a dubious slice of businesses. Therefore, Phat Scooters is a Neutral deal.