[834905]

I’m assuming these are just businesses trying to scale with how crazy the bike market has been, but it seems weird that they’re doing it in a crowdfunding way. It seems like it would be much easier to go find investors than to send people like me emails asking for a few bucks. I’ve received emails from multiple companies since November, so it’s not just some wacky one off situation.

I’m also curious why, if bike companies are moving to the preorder model (which a lot seem to be doing) do they need so much capital to scale? Parts and R&D I’m assuming?

It’s interesting for sure. I’m not in for this stuff personally, because I think the bike market will simmer down as things go more and more back to normal. Im already seeing more stock in my LBS.

 

[Jayem]

Because people are gullible

 

[Timothy G. Parrish]

Bike manufacturers have to book time in many of the same factories that make frames. Demand is so high, that they can't make more than they order for, and that is for NEXT YEAR models. Hence the preorder route. They can only make so many, so you want one, preorder one to guarantee you'll get one. This also ensures the bike manufacturers make what models and sizes they will sell, without being left with stock nobody wants or can use (e.g. 20 XL size bikes).

Which companies are crowdfunding? I assume smaller, less established boutique brands?

Sent from my moto g(7) power using Tapatalk

 

[Klurejr]

Some use crowdfunding as a vehicle for preorders, especially if they are low on expendable capital.

Plus crowdfunding/preorders does not put a small company in debt to a traditional venture capitalist.

 

[834905]

Some use crowdfunding as a vehicle for preorders, especially if they are low on expendable capital.

Plus crowdfunding/preorders does not put a small company in debt to a traditional venture capitalist.

These aren’t preorders though. They’re treating it like an investment, where people have shares in the company.

 

[834905]

Which companies are crowdfunding? I assume smaller, less established boutique brands?

Esker was one, which is definitely a small brand. Terrene was another, which I thought they were owned by a bigger parent company…. The third, I honestly can’t for the life of me remember who it was from.

 

[Klurejr]

These aren’t preorders though. They’re treating it like an investment, where people have shares in the company.

Do you have an example to provide? I have "invested" in a number of Kickstarter projects over the years. Mostly for Boardgames from new publishers, or small publishers.
I also have kickstarted a number of books for an author I like who decided to self publish. He needed the capital to place the book order with the printer since there was no publishing house behind him. I am happy to do it because in all 9f the cases where I did so I got the product I wanted in exchange for my money and some wait time for publishing.

 

[834905]

Do you have an example to provide? I have "invested" in a number of Kickstarter projects over the years. Mostly for Boardgames from new publishers, or small publishers.
I also have kickstarted a number of books for an author I like who decided to self publish. He needed the capital to place the book order with the printer since there was no publishing house behind him. I am happy to do it because in all 9f the cases where I did so I got the product I wanted in exchange for my money and some wait time for publishing.

Here is Eskers, and I believe Terrene is using the same site. It looks like actual company shares to me vs having dibs on a product like with Kickstarter… I could be missing something though. I’m admittedly not great with this type of investment stuff.

Esker Cycles by Krueger Outdoor

 

[Loll]

I think the other bike brand is that full suspension bike that has integrated hidden shock like a Scott, but more travel.

 

[2021Mach6]

I’m assuming these are just businesses trying to scale with how crazy the bike market has been, but it seems weird that they’re doing it in a crowdfunding way. It seems like it would be much easier to go find investors than to send people like me emails asking for a few bucks. I’ve received emails from multiple companies since November, so it’s not just some wacky one off situation.

I’m also curious why, if bike companies are moving to the preorder model (which a lot seem to be doing) do they need so much capital to scale? Parts and R&D I’m assuming?

It’s interesting for sure. I’m not in for this stuff personally, because I think the bike market will simmer down as things go more and more back to normal. Im already seeing more stock in my LBS.

Crowdfunding is getting more and more popular, and you're being targeted cause you have an online interest in MTB. Since crowdfunding is growing in popularity, and so is mountain biking, it's just the direction a lot of startups are going. People might not have access to venture capitalists, and a lot of sites like Kickstarter you don't have to give up any equity. And as someone else mentioned, you don't go into debt.

 

[834905]

Crowdfunding is getting more and more popular, and you're being targeted cause you have an online interest in MTB. Since crowdfunding is growing in popularity, and so is mountain biking, it's just the direction a lot of startups are going. People might not have access to venture capitalists, and a lot of sites like Kickstarter you don't have to give up any equity. And as someone else mentioned, you don't go into debt.

I think these ones are giving up equity though? Unless I’m misunderstanding that site they’re using.

 

[CrozCountry]

Typically crowdfunding because it's much better terms for the company, professional investors are not interested, or they want an upfront order log to significantly reduce the risk and allow manufacturing.

In the case of esker, probably the latter two.

 

[Cary]

Here is Eskers, and I believe Terrene is using the same site. It looks like actual company shares to me vs having dibs on a product like with Kickstarter… I could be missing something though. I’m admittedly not great with this type of investment stuff.

Esker Cycles by Krueger Outdoor

Holy crap, people have “invested” in this?!. They have 2.8 million shares outstanding of which 1.3 are owned by the CEO and the “investors” agree that they will give the CEO a proxy to vote their shares. So the CEO can do what he wants. Their net loss in 2019 was $862,000, dropping to $122,000 in 2020 and they have a lot of debt. Looks like a case of hoping to grow out of it, but man, not an “investment” I would get within 1000 yards of.

In other news, they disclose upcoming products:

“We’re preparing for a spring 2022 launch of our Titanium Hayduke and Japhy, followed by two new (and undisclosed) Titanium models in the fall.

In 2023 and 2024, we plan to launch three new steel models as well as three new suspension models, all of which are already in the engineering and design phase. Between an established product line and continued customer demand, we’re poised for a unique stage of hypergrowth.”

Their 2023 roadmap says aluminum versions. The problem I see is they are entering a limited market with a lot of competitors.

 

[Philco]

Schwinn, Pacific Bicycles, Mongoose, Cannondale just got sold to some guy in the Netherlands for pennies. Think the Chinese factory workers were not paid and the Schwinnbikes.cc and Mongoosebike.cc websites with a Georgia phone number may in fact be the chinese factory workers trying to sell those bikes cheap since they were not paid. Are the chinese running a online bike store in Georgia?

We haven't seen anything yet in terms of bicycle parts shortages. 2022 will be worse.

Pacific Cycle Races Into 2022 Under New Ownership • The Toy Book

Schwinn, KidTrax, and Mongoose are among the brands joining the growing Pon.Bike global portfolio.

toybook.com

 

[834905]

Holy crap, people have “invested” in this?!. They have 2.8 million shares outstanding of which 1.3 are owned by the CEO and the “investors” agree that they will give the CEO a proxy to vote their shares. So the CEO can do what he wants. Their net loss in 2019 was $862,000, dropping to $122,000 in 2020 and they have a lot of debt. Looks like a case of hoping to grow out of it, but man, not an “investment” I would get within 1000 yards of.

In other news, they disclose upcoming products:

“We’re preparing for a spring 2022 launch of our Titanium Hayduke and Japhy, followed by two new (and undisclosed) Titanium models in the fall.

In 2023 and 2024, we plan to launch three new steel models as well as three new suspension models, all of which are already in the engineering and design phase. Between an established product line and continued customer demand, we’re poised for a unique stage of hypergrowth.”

Their 2023 roadmap says aluminum versions. The problem I see is they are entering a limited market with a lot of competitors.

So basically they would probably have a hard time finding big money investors, so they’re trying to nickel and dime a large crowd of people instead?

 

[Cary]

So basically they would probably have a hard time finding big money investors, so they’re trying to nickel and dime a large crowd of people instead?

I would say there are no normal investors interested. The bike industry is a terrible way to make money and a great way to lose it. If I had to guess, they cannot get traditional investors and given their lack of income and existing debt, cannot get further loans without giving up equity or very high rates, so they see this as a way to raise capital. I find it disturbing that they expect the investors to give a proxy to the CEO, which will give him a majority of the voting shares, and essentially operate carte blanc.

There are a lot of people out there that are happy to “invest” in poor investments. Oil wells, SPACs, race horses, apartment buildings in China, timeshares, the list goes on.

 

[834905]

I would say there are no normal investors interested. The bike industry is a terrible way to make money and a great way to lose it. If I had to guess, they cannot get traditional investors and given their lack of income and existing debt, cannot get further loans without giving up equity or very high rates, so they see this as a way to raise capital. I find it disturbing that they expect the investors to give a proxy to the CEO, which will give him a majority of the voting shares, and essentially operate carte blanc.

There are a lot of people out there that are happy to “invest” in poor investments. Oil wells, SPACs, race horses, apartment buildings in China, timeshares, the list goes on.

Yea this is why all of my retirement investments are monitored by a company that knows what they’re doing lol

 

[2021Mach6]

I think these ones are giving up equity though? Unless I’m misunderstanding that site they’re using.

Not very familiar with those two sites, but Kickstarter and the more popular ones you're not allowed to give equity.

 

[SkyAboveDirtBelow]

Crowdfunding 101:

1) Don't risk your own money if you can get a bunch of fools to risk theirs.
2) Have a ready-made excuse for when things don't work out.

 

[Bacon Fat]

Holy crap, people have “invested” in this?!. They have 2.8 million shares outstanding of which 1.3 are owned by the CEO and the “investors” agree that they will give the CEO a proxy to vote their shares. So the CEO can do what he wants. Their net loss in 2019 was $862,000, dropping to $122,000 in 2020 and they have a lot of debt. Looks like a case of hoping to grow out of it, but man, not an “investment” I would get within 1000 yards of.

In other news, they disclose upcoming products:

“We’re preparing for a spring 2022 launch of our Titanium Hayduke and Japhy, followed by two new (and undisclosed) Titanium models in the fall.

In 2023 and 2024, we plan to launch three new steel models as well as three new suspension models, all of which are already in the engineering and design phase. Between an established product line and continued customer demand, we’re poised for a unique stage of hypergrowth.”

Their 2023 roadmap says aluminum versions. The problem I see is they are entering a limited market with a lot of competitors.

They did get a nice family member to loan them 100K at 15% for 2 years. Seems like that family member knows what is coming
"For 2025 and beyond, we have explored strategies to continue our growth, such as selling to or merging with other companies in the cycling industry that need our flexible sales methods and/or the consumer-facing channels."