Zagster Gets $15M to Keep Pace in Crowded Bike-Sharing Sector

Zagster has scooped up $15 million from investors to help it ramp up its new “dockless” bike-sharing service—and compete with more heavily funded rivals.

The investment, led by earlier backer Edison Partners, brings Zagster’s total venture capital haul to $32.2 million, the company said in a press release. Cambridge, MA-based Zagster’s other investors include LaunchCapital, Fontinalis Partners, Clean Energy Venture Group, Launchpad Venture Group, Otter Consulting, and several Boston-area angel investors.

Eleven-year-old Zagster went through the Techstars Boston startup accelerator program in 2012. It operates more than 200 bike-share programs for cities, universities, and real estate properties across 35 states.

But continued growth won’t be easy, as Zagster faces stiff competition from companies with much deeper coffers. Chinese bike-sharing firms Ofo and Mobike, for example, have each raised hundreds of millions of dollars from investors, while California-based LimeBike has raised $132 million from backers, including a fresh $70 million investment announced this month.

Zagster said its latest investment will help it expand its dockless bike-sharing service, called Pace, which it launched in December. Zagster says it has Pace programs in Tallahassee, FL, and Knoxville, TN, with more in the works.

Dockless bike-sharing programs enable users to rent bikes without being required to return them to a designated station operated by the company; for example, they might drop them off at a public bike rack. Pace seems to be a hybrid of the two bike-sharing models. On its website, Zagster says Pace users can park bikes at any public rack or at racks provided through the Pace program. (People can also park their personal bikes at Pace racks.) In the press release, Zagster said its approach aims to “meet rising demand from cities that want dockless bike sharing, but require a lock-to model to mitigate the theft, abuse, and chaos associated with other dockless bike-sharing providers.”

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