VanMoof, for which bankruptcy is imminent, has always had problems

What’s going on at VanMoof? The Dutch bicycle manufacturer, known for the sleekly designed electric bicycles that are mainly driving around in the Randstad, has been granted a deferment of payment on Wednesday morning. Customers had not been able to order new bicycles for weeks. Online it rains complaints. And now bankruptcy is imminent. How fundamental are the problems? Three questions and answers.

1 What else should I know about VanMoof?

Amsterdam-based VanMoof was founded in 2009 by the brothers Taco and Ties Carlier. The industrial designers built a solid city bike with clean lines. The ambition: to ensure that city dwellers worldwide no longer take the car, but go to work in a healthy (and sustainable) way by bicycle.

In 2016 VanMoof launched an electric version of the bicycle, which is linked to an app. After that it went fast: VanMoof says it has now sold 200,000 bicycles in Europe, the United States and Japan. For a few years now, the company has focused exclusively on the production of e-bikes. Like many other e-bike manufacturers, VanMoof experienced significant growth during the corona pandemic. In 2021, turnover amounted to 83 million euros, 29 percent more than the year before.

In order to scale up production capacity, VanMoof continuously needed substantial investments. The company has so far raised around 200 million euros in financing in several rounds. At crowdfund platforms, but also at large private equity companies.

2 What’s going on now?

The court in Amsterdam has the opposite on Wednesday NRC confirmed that VanMoof’s parent company has applied for and received a suspension of payments. The court has also set a ‘cooling off period’ of two months, during which creditors cannot claim money or goods from the company.

The immediate reason for the moratorium is the failure of the negotiations on a bridging investment. It was urgently needed: Wednesday morning it reported Financial Daily that VanMoof would have missed an interest payment to the crowdfunding platform OnePlanetCrowd, where VanMoof raised a total of 5 million euros. The business newspaper writes that OnePlanetCrowd has sent a demand letter to VanMoof: if the interest is not paid within fourteen days, the investors could immediately demand their loan. Now that the court has introduced a cooling-off period, this is no longer possible.

VanMoof staff — employing about 700 people worldwide — were briefed on the situation by email Wednesday evening. This will not have come as a surprise to everyone: VanMoof closed its European service points around 3 p.m. on Wednesday afternoon. In Amsterdam, angry customers showed up at the door, who wanted to come and collect their bicycle – in vain.

At least 10 percent of the bicycles sold had to be returned to the shop within a year

Customers have not been able to order a new VanMoof for two weeks. The company initially claimed that this was due to a computer malfunction. Currently, the company’s website states the following statement: “We have temporarily paused sales in order to catch up on production and delivery of existing orders. Don’t worry – this will not affect service.”

3 Weren’t there problems before?

In fact, VanMoof has had problems from the start. The bikes were soon picked up abroad, and the Carliers immediately jumped in. In an interview with NRC in 2016, Taco Carlier described that growth as “too fast”: “We sold all over the world, while we were in the office in the Netherlands with eight people.”

The bikes also suffered from teething problems. The brothers then decided to keep everything related to the bicycle in their own hands from now on: from designing the frame to the design of the smallest sprocket. And from sales, service and repairs, to the app that allows you to lock the bike.

However, this control did not solve the problems — on the contrary. VanMoof could not keep up with the rapid growth: customers who paid 2,000 euros or more for their bicycle waited up to three months for it to be delivered. And the self-designed e-bikes not only turned out to be extremely popular, but also prone to defects. At least 10 percent of the bicycles sold had to be returned to the shop within a year.

Here too, VanMoof couldn’t keep up with demand: customers with a broken bicycle sometimes had to wait months for repairs — if they managed to make an appointment at all. The company’s communication channels were regularly down. To do something about the waiting times, VanMoof set up a network of repairers last year. KwikFit was also added to that network at the end of last month.

Because VanMoof does the repairs internally, the company itself also pays for the large number of defects. In 2021, the company had lost 8 million euros in warranty and repair costs. It contributes to the fact that VanMoof has never turned a profit. VanMoof posted a net loss of around 6 million euros in 2019. The following year, the deficit rose to 35 million. The 2021 annual report — which has not been approved by an accountant — shows that the deficit that year already amounted to 78 million euros. A similar loss is foreseen for 2022.

Read also: VanMoof director: ‘Profit doesn’t really matter’

Each time, fresh capital injections from investors kept the company afloat. At the beginning of this year, the company raised another 10 to 40 million from existing financiers and suppliers. Without that extra cash injection, the company might have collapsed much earlier. But the investment climate has cooled due to rising interest rates, and it is no longer easy for start-ups like VanMoof to raise new capital.

It is not yet clear what will happen with the supply of parts and repairs. Suspension of payment is often a precursor to bankruptcy, but not always. If the company closes its doors permanently, another party will have to take over the production of parts to keep the bikes running. The app will also disappear from the Apple and Google stores after a while, if it no longer receives updates.