Zoomo founder Mina Nada validated his electric bike business as a side hustle before going all-in. To fund Zoomo's physical assets, he used debt financing, reserving more expensive venture capital (equity) for scaling the team and technology. This two-part capital strategy allowed Zoomo to raise over $100M and scale globally.
Key takeaways
- De-risk your startup idea as a side hustle before quitting your job.
- Use equity (venture capital) to fund things that scale non-linearly, like software, brand, and R&D.
- Use debt to finance physical assets that generate predictable revenue, like vehicles or equipment.
- Don't use expensive equity to pay for depreciating assets.
- A corporate shake-up or acquisition can be the perfect trigger to go full-time on your validated idea.
- For asset-heavy businesses, show investors a clear path to layering in debt financing.
Many founders drift from a stable career into the startup world in search of greater impact. Mina Nada’s path from law to consulting to founding Zoomo, a global electric bike company with $100M in funding, is a masterclass in de-risking a big idea and intelligently funding an asset-heavy business.
While the original story notes Nada used both debt and equity, it glosses over the most important lesson for founders: how and why to use each. This is the playbook for funding a business that relies on physical assets.
De-Risking with a Side Hustle MVP
Before Zoomo, there was a side hustle. In 2017, while working at Deliveroo and later Mobike, Nada and his co-founder spotted a clear need: food delivery couriers needed better, more reliable electric bikes. The vehicles available were expensive, unreliable, and lacked proper maintenance support.
Instead of writing a business plan and raising a pre-seed round on an idea, they ran a real-world test. They started by buying just 10 electric bikes with their own money.
This is your first lesson: validate demand with the smallest possible experiment. Don’t ask people if they would use your product; make them actually pay for it. The goal was to answer two questions:
Will couriers pay to use these bikes? · Will the revenue from a bike be more than the cost to buy and maintain it?
The initial test was a success. They made their money back and bought more bikes, growing the fleet to a few hundred—all while still employed. This wasn’t just a side hustle; it was a self-funded MVP that generated the critical data they’d need to raise real money later.
When to Go All-In
The decision to leap from a stable job to a startup is rarely clean. For Nada, a market event forced his hand. His employer, Mobike, was acquired, and the new owners decided to shut down international operations. Suddenly, he was out of a job.
But he wasn’t starting from zero. He had a working, profitable business with a few hundred paying customers. The side hustle had become a safety net. The decision wasn't "Should I start a company?" but "Should I scale the company that's already working?"
An introduction led to a $2M seed round. This wasn't a blind bet on a pitch deck. It was an investment in a proven model. The pitch was simple: "We have 200 bikes, they generate X dollars per month, and the payback period is Y months. We need $2M to buy the next 2,000 bikes and hire an operations team."
The Founder's Guide to Debt vs. Equity
Here is where the real lesson begins. A business like Zoomo, which owns and leases thousands of vehicles, is "asset-heavy." The biggest mistake an asset-heavy founder can make is using the wrong type of capital to fund their growth.
Nada raised over $100M by using two different kinds of money: equity and debt .
Equity Financing: For Enterprise Value
Equity financing is venture capital. You sell a percentage of your company (equity) to investors in exchange for cash. This is expensive money. Giving up 20% of your company for a $2M seed round at a $10M valuation implies your business needs to be worth hundreds of millions or billions for that investment to pay off.
You should only use expensive equity for things that create long-term, scalable enterprise value . These are things that aren’t directly tied to a single physical asset.
Technology and Software: Building the booking platform, fleet management software, and payment systems that run the business. · Team: Hiring engineers, marketers, and operators who can build and scale the company. · Brand & Marketing: Establishing your company as a market leader. · R&D: Designing your own custom, durable vehicles built for delivery. · Market Expansion: The cost of launching in a new city or country.
These investments aren't "depreciating assets." A great software platform becomes more valuable over time. A strong brand becomes a moat. That’s what venture capital is for.
Debt Financing: For Depreciating Assets
Debt financing is a loan. You borrow money from a lender and pay it back with interest over a set period. You do not sell any ownership of your company. This is cheaper money, but it’s only available when you have predictable revenue.
Zoomo’s bikes are depreciating assets. A $2,000 bike might be worth $1,000 in two years. Using expensive equity to buy thousands of bikes is a huge mistake. Why give away 20% of your company to buy an asset that loses value?
Instead, smart founders use debt to finance these assets once the unit economics are proven.
The Model: Once Nada proved that a single bike could generate, for example, $150/month in lease fees with a payback period of 18 months, he could go to a lender. The conversation changes from a pitch to a math problem.
Founder to Lender: "I have a purchase order from a customer for 1,000 bikes. Each bike costs me $2,000 and generates $150/month under a 2-year contract. Will you lend me the $2M to buy these bikes? The revenue from the bikes themselves will pay back your loan plus interest."
This is how you scale an asset-heavy business without giving away the entire company. You use equity to build the machine (the software, the team, the brand) and debt to buy the widgets the machine processes (the bikes).
Common Mistakes Founders Make
Using Equity for Depreciating Assets: It bears repeating. The #1 mistake is funding 100% of your physical inventory with venture capital. Your dilution will be massive and you’ll be forced to raise endless, painful rounds. · Seeking Debt Too Early: Lenders are not VCs. They don’t bet on ideas. You cannot get a debt facility until you have a predictable, proven revenue model with strong unit economics. You need the data from your first few hundred "equity-funded" assets to unlock cheaper debt financing. · Ignoring Unit Economics: If you don't know the precise payback period of a single asset, you can't raise debt. You must track the all-in cost (purchase, maintenance, insurance, theft) and the total revenue it generates. · Scaling Before Finalizing the Asset: Zoomo learned early on that consumer e-bikes weren't durable enough for commercial use. They used their early learnings and equity funding to design their own purpose-built vehicles. Scaling with the wrong asset can bankrupt you.
How to Apply This to Your Startup This Week
You don’t need to be raising $100M to apply these lessons. The principles scale down to any level.
Map Your Expenses: Create two columns. In one, list all your scalable, enterprise-value expenses (software, hiring, marketing). In the other, list your asset-related, per-unit costs (inventory, hardware). This is your future capital strategy map. · Calculate Your "Side Hustle" MVP Cost: What is the absolute smallest experiment you can run to prove a customer will pay? For Zoomo, it was 10 bikes. For you, it might be 5 units of inventory or a single paid pilot project. Figure out the cost and find a way to self-fund it. · Frame Your Seed Round Pitch Correctly: If you’re raising equity for an asset-heavy business, don’t just ask for money. Show investors how this initial, expensive equity will be used to unlock cheaper, non-dilutive debt financing down the road. This shows capital efficiency and sophistication.
Mina Nada’s journey provides a clear path: validate your idea on a small scale, use a market shift to go all-in, and build your capital stack with the right instrument for the right job. Use equity to build your moat and debt to fill it with revenue-generating assets.
Frequently asked questions
- When should a startup use debt instead of equity?
- Use debt when you have predictable revenue tied to a financeable, depreciating asset. This is cheaper than equity and avoids unnecessary dilution, preserving ownership for the founding team.
- What is an 'asset-heavy' startup?
- It's a business where a significant portion of its costs are tied to physical things, like vehicles, real estate, or inventory. Examples include scooter companies, ghost kitchens, and direct-to-consumer hardware.
- How do you start a hardware business as a side hustle?
- Start with the smallest possible test. Zoomo began with just 10 bikes, funded out-of-pocket, to prove demand and unit economics before seeking external capital.
- What do investors want to see for a Seed round in an asset-heavy business?
- Investors need to see a validated model with strong unit economics from a small-scale test. You must show that the revenue generated from each asset quickly pays for the asset itself.
