The “Apple of bicycle builders” wanted to create the brothers Taco and Ties Carlier. The founders of VanMoof have been featured in TV shows and posh international business magazines such as Monocle. “Leaders of the e-mobility transformation of the 2020s,” they called themselves. And although the brand’s hip electric bicycles can still be seen on cycle paths – from Amsterdam to New York to Tokyo – after fourteen years the end seems near for the Amsterdam company.
The company was granted a deferment of payment this week by the court in Amsterdam, often a prelude to bankruptcy. An urgent problem arose at VanMoof when a proposed new investment fell through. After the fresh capital was not forthcoming, VanMoof had no choice but to request a deferment of payment. The company itself declined to comment.
It is a disappointment for the Dutch manufacturing industry. Especially since the Eindhoven solar car manufacturer Lightyear, also a favorite of the public for a long time, also ran into problems six months ago. Both new manufacturing companies had sky-high ambitions with consumer products: Lightyear wanted to turn the car industry upside down like a new Tesla, just as VanMoof wanted to become the Apple of bicycle manufacturers.
Perfectly in the zeitgeist
Yes, the exterior of the company does, or did, look somewhat Apple-like. The bike looks innovative, with its design and features, the marketing has always been excellent. The product fits perfectly in the spirit of the times, especially when people worldwide started cycling en masse during the pandemic.
And the Carlier brothers gave it a good try, says Alexander Ribbink, partner of investment company Keen Ventures and ex-director of TomTom: “But of course we are not talking about what you would call in our world: a very deep tech moat.” It’s not as if VanMoof is protected from competition by a deep moat of patents and unique technology, he says.
It is a hip e-bike, but also just an e-bike for which there are all kinds of (much cheaper) competitors. And moreover an e-bike that remains heavily loss-making, despite the hefty sales price.
Read also: VanMoof, for which bankruptcy is imminent, has always had problems
The last public annual report of 2021 showed a loss of 78 million euros. That is not exceptional for a fast-growing industrial start-up, even a company like Tesla made huge losses until recently. But VanMoof failed to convince investors that the gap could ever be closed. “And if you cannot make a profit with a sales price of 3,000 euros per bicycle, the question arises whether that is ever possible at all,” says Ribbink. Then either the price has to rise sharply, or the costs have to fall sharply. Neither happens.
Burn endless money
VanMoof is also in the eye of the storm of explosive interest rates over the past year: the time of free money for start-ups is over. Where all kinds of companies have been able to burn endless money in recent years, that trend has definitely turned. “It is no coincidence that we are now seeing more start-ups fail,” says sector economist Albert Jan Swart of ABN Amro. “The low interest rates may also have resulted in a lack of discipline.”
Investment circles around the company also say that the Carlier brothers are not very receptive to business advice and criticism. “They are artists who do not always listen carefully to people in suits,” says one person involved who wishes to remain anonymous. Because Taco is located in Amsterdam and Ties operates from Taiwan, communication about agreements made can be messy. The founders are also known by another party involved as ‘stubborn’, although they are also praised for their work ethic and vision.
Slingshot Ventures, a major investor, will exit in 2020 after a disagreement over the price. In 2022, after growing problems with delivery times and repairs, a new heavyweight will temporarily be flown in as a driver: Gillian Tans, the former top woman of the Dutch tech giant Booking. She then suddenly left last May, without herself or the company wanting to explain this. That fuels rumors and speculation about the downturn.
The final bottle neck for VanMoof, according to various market experts, it wants to keep a large part of the production and assembly of parts in-house. This contributes to the unique appearance of the bicycles, but ultimately also to delivery problems and the fact that the bicycles are difficult to repair: parts cannot be obtained anywhere else than at VanMoof itself. After the pandemic, major shortages of materials, parts and labor arise. An ocean of work has to be done through a channel of service that has become too narrow.
Customer service is also dramatically lagging behind demand as a result. Web forums are full of angry customers who often have to wait many months with a broken bicycle. Consumer programs such as Radar diving into the company. The reviews on online platforms such as Google do not lie either. The company has a devastating rating of 2.2 stars on the search engine. “Don’t buy here,” customers warn each other. A hastily concluded collaboration with repair company KwikFit, which was announced last month, cannot turn the tide.
That feeds a destructive spiral. It just keeps raining complaints. Investors lose confidence. Customers put their bicycles on Marktplaats en masse. Last Wednesday, the atmosphere around Amsterdam became grim flagship store from the company: angry customers come to claim their new or serviced bicycles, for fear that this will soon no longer be possible. Ultimately, the case must be closed by the police. The brand has proven stronger than the company.