The Dutch company VanMoof, which makes trendy electric e-bikes, is in financial trouble. It almost makes one forget that VanMoof was once a growth gem. Since its foundation in 2009, by the brothers Taco and Ties Carlier, expectations have been sky-high.
The brothers wanted to conquer the world with their minimalist e-bike. In 2008 they got off to a good start, in 2016 their first e-bike came on the market. And the trendy bicycles quickly gained a large fan base in the cities. Not least because reviewers repeatedly wrote enthusiastic stories about the VanMoof models. The same goes for tech platform Bright, which particularly praised the innovative power of the brand.
But Bright’s editor-in-chief, Erwin van der Zande, no longer included the VanMoof in his buying guide in June. “It went wrong with the new S3 model. There were too many problems with it. One in a hundred of a good bicycle comes back for repair. With the VanMoof bicycle that was a factor of ten higher. The company was not set up for that at all Not even in terms of capacity for repairs.”
Van der Zande thinks that one model, the S3, could cost the company its head. “It certainly wasn’t the marketing,” says business analyst Corné van Zeijl. “But if products incur additional costs, then you very quickly have an operational problem.”
Alarmed by this disturbing news, customers tried to arrange something today before it is too late:
VanMoof did things differently from other bicycle manufacturers: it delivered the bicycles directly to the customer, without intermediaries. And also for maintenance, customers can only contact the brand. But the bikes regularly suffer from defects; the company was faced with a growing stream of repair requests. “It’s still a sexy bike that everyone would like to have, that gives potential. But then that bike has to work,” says Van Zeijl.
The long delivery times have not helped the company either; Waiting six months for an ordered bicycle was no exception. And parts for a repair would often not be in stock.
The online consumer program BOOS mapped out the problems in June. “From talking to eighteen (former) employees and viewing documentation, we can conclude that VanMoof does not communicate honestly and completely to both customers and employees about the causes of the problems at the company.” And: “VanMoof would sell bicycles before they are fully developed and/or produced.”
‘Tesla among the bicycles’
Van Zeijl calls VanMoof the “Tesla of bicycle manufacturers”. Both companies come up with a sexy electrical product, they skip the middleman and they are both very high in the price chain. A high price that people are also willing to pay.” But the big difference with Tesla, according to Van Zeijl, is that Tesla – which also had many start-up problems and financing problems – was listed on the stock exchange. “At a certain point everyone started to believe in it and the price went fast upwards. They were able to issue shares, which solved the financing problems in one fell swoop.”
Van Moof cannot do that. The company has been struggling with financial problems for some time and even recently halted sales. The crowdfunder, where VanMoof raised 5 million euros from private investors, has declared the company in default for non-payment of interest payments.
Customers have also not received a refund for returned products for weeks. And most importantly, the company would run out of money. The court in Amsterdam granted VanMoof a moratorium today. Without new credit, the curtain falls.
Where production problems at the start of a company are still acceptable for investors, things have to go well for once. Van Zeijl thinks that a new credit can still be difficult. “It didn’t matter before, as long as you showed growth, everyone was happy to provide you with capital. But now that interest rates have risen so much, everyone is going to think again.”
VanMoof had raised another 5 million euros from private investors in a new financing round this spring. “So apparently it wasn’t enough,” says Van Zeijl. “If there is no new financing, the losses and production problems will be too great. Then I am sad for this company.”