The city of San Francisco announced it's granting scooter permits to small start-ups Scoot and Skip, shutting out well-funded hometown businesses including Uber, Bird, Lime and Lyft.

The move follows San Francisco's decision earlier this year to ban the scooter companies from operating without a permit, after scooters from several providers, including Bird, Lime and Spin, flooded the streets and clogged up sidewalks. The city opened up a permit application process and said it would allow 1,250 scooters onto the streets.

A dozen operators submitted applications, and San Francisco ultimately shunned the companies that started the rush in favor of two newcomers. Skip and Scoot will be permitted up to 625 scooters each.

"At the tail end of March, three companies — Bird, Lime and Spin — unloaded hundreds of motorized scooters across San Francisco," the city's Municipal Transportation Authority said in a statement on Thursday. "While they were operating, several concerns were raised by the city and our communities."

Venture firms have poured capital into bike and scooter start-ups, pumping up valuations, after ride-hailing companies like Uber and Lyft trounced the entrenched taxi industry. Lime and Bird are each worth more than $1 billion on paper, to the disbelief of many Silicon Valley observers. Uber acquired Jump Bikes in April for about $250 million, notching an early exit for investors in bike-sharing. But the battle for "last-mile" transportation is still in its very early days.

Companies that offer electric scooters and bike-sharing services are now in a race to grow their operations across U.S. markets like San Francisco and southern California, where the weather is mild and residents can make use of their products all year round. Local officials in the Bay Area have tried to rein in companies that they viewed as sidestepping existing regulations to establish a footprint before proper rules could be put into place.