How crowd­fund­ing is chang­ing the way we think about cy­cle prod­ucts

Urban Cyclist - - Contents - Words: Rob Kemp Im­ages: Jesse Wild*

So... are you in?

Wel­come to the world of crowd­fund­ing, the in­ter­net-en­gi­neered in­vest­ment phe­nom­e­non that’s fu­elling a cy­cling rev­o­lu­tion. Reg­u­lar read­ers will note the ‘ New Gear’ sec­tion of Ur­ban Cy­clist fre­quently fea­tures bikes, ac­ces­sories and cy­cling gad­gets that are ei­ther seek­ing crowd­fund­ing or has only seen the light of day be­cause of cash that’s been pledged and sourced via this vir­tual, vi­ral spon­sor­ship form. “Cy­clists have em­braced crowd­fund­ing as it’s in­no­va­tive and ap­peals to a sense of com­mu­nity,” says Luca Amaduzzi, co-founder of Lon­don brand CYCL ( and cre­ator of WingLights. Amaduzzi’s not be­ing hy­per­bolic – crowd­fund­ing has democra­tised the way peo­ple raise funds, while al­low­ing en­trepreneurs to keep con­trol of their busi­ness.


It’s en­abled start-up in­no­va­tors to gar­ner valu­able mar­ket in­sight, to test and val­i­date their prod­ucts, as well as be­ing a use­ful mar­ket­ing tool. As a re­sult of the grow­ing de­vo­tion to crowd­fund­ing among cy­clists around the world, the likes of Matt Mears, founder of Bris­tol-based Tem­ple Cy­cles, is look­ing to find new in­vestors to take his com­pany up a gear. “There are dif­fer­ent types of crowd­fund­ing,” ex­plains Mears. “The most com­mon is Re­ward Crowd­fund­ing, where a com­pany takes a pro­to­type to mar­ket to se­cure pre-or­ders. Kick­starter is the lead­ing web­site for that kind.” Then there’s Equity Crowd­fund­ing. “This is where a com­pany sells off a per­cent­age of its po­ten­tial to in­vestors – they’re buy­ing shares in dig­i­tal busi­nesses via on­line plat­forms such as CrowdCube and See­drs,” Mears con­tin­ues. “It’s for se­cur­ing long-term in­vest­ment and, fur­ther down the line, the in­vestor might sell their share, ei­ther back to the com­pany or to a larger firm that may buy into the orig­i­nal one.” For Amaduzzi and his busi­ness part­ner, Agostino Stilli, their ini­tial foray into Re­ward Crowd­fund­ing has since led to fur­ther in­vest­ment. “We made a work­ing pro­to­type as we would have needed more money than we had to take it to a man­u­fac­turer. We spent hun­dreds of hours de­sign­ing and work­ing out pro­duc­tion for our idea [Agostino’s PHD is in Robotics and Luca Mas­tered in In­no­va­tion] but we needed the money to take it to the next level.” That’s where the crowds of fund­ing cy­clists came in. In or­der to man­u­fac­ture a saleable batch of their unique bike in­di­ca­tors, CYCL

needed £8,500 up front. In the past the most com­mon cash source would have left them at the mercy of a bank man­ager and ac­cru­ing in­ter­est on a loan be­fore the ink on the cheque had dried. But we live in a crowd­funded world these days.

In­di­ca­tors of suc­cess

They shot a video fea­tur­ing their pro­to­type, filed an ap­pli­ca­tion to crowd­fund, and launched and up­loaded their ap­peal to the Kick­starter web­site in De­cem­ber 2014. Their lights caught the eyes of over 600 back­ers. In just three days they reached their tar­get amount. And then their cam­paign went vi­ral. “In 30 days we’d raised £17,000,” says Amaduzzi. By Christ­mas 2016 CYCL had sold over 16,000 WingLights, con­tribut­ing to a com­pany turnover of £215,000. Equity crowd­fund­ing has since fol­lowed in the shape of a £45,000 busi­ness in­vest­ment from the Moon­ founder Nick Jenk­ins af­ter Luca and Agostino pitched to the Dragon’s Den TV show. Jenk­ins gets a 12.5% share of the com­pany in re­turn for say­ing ‘ I’m in’. “The cy­clists who have bought into WingLights see a prod­uct that’s a good idea,” says Amaduzzi. “It was de­vel­oped fol­low­ing our per­sonal ex­pe­ri­ences of nav­i­gat­ing Lon­don streets. For the fund­ing to work, the crowd needs to see some­thing in that pitch that they can pic­ture them­selves and oth­ers us­ing.

To date Mor­pher has sold more than 4,000 hel­mets and its cus­tomer base con­tin­ues to grow

“What you don’t ex­pect with a crowd­fund­ing cam­paign is for peo­ple to pledge money just to help you get started. Cy­clists would buy more units than they needed, just to help us grow – plus you get feed­back and ad­vice. But we are re­ally lucky and know that this may be un­usual.” Ex­cept that their story is not so un­usual. “We’ve crowd­funded our SpeedForce cy­cling com­puter, our Leop­ard road bike and the Uni­corn road bike us­ing Kick­starter,” Raggy Lau of SpeedX, a Bei­jing-based brand, tells us. “We used Kick­starter as it’s six times big­ger than the num­ber two plat­form, Indiegogo.” Com­ing to the crowd­fund­ing mar­ket with that com­bi­na­tion of nov­elty and new tech­nol­ogy ap­pears to be the magic for­mula. In­ven­tor Jeff Woolf, who used Indiegogo, cre­ated the Mor­pher Flat Fold­ing Cy­cle Hel­met af­ter nearly dy­ing in a bike ac­ci­dent. Once Jeff had de­vel­oped a pro­to­type hat, he shot a demon­stra­tion video, up­loaded it to Indiegogo and sent press re­leases out to city cy­clists. “I chose Indiegogo be­cause it had an in­ter­na­tional reach. I’d set the goal at $35,000 (UK £27,800) and smashed through that in two months, and the or­ders are con­tin­u­ing to roll in three years down the line.”

Play­ing the equity card

To date Mor­pher has sold more than 4,000 hel­mets and its cus­tomer base con­tin­ues to grow. Hav­ing been suc­cess­ful through re­ward crowd­fund­ing, Woolf, much like Matt Mears at Tem­ple Cy­cles, is now look­ing to at­tract in­vest­ment into the po­ten­tial to grow fur­ther.

Matt Mears is ask­ing cus­tomers, friends, sup­port­ers and sup­pli­ers to help him grow the busi­ness by mak­ing equity in­vest­ments

“We’re about to launch an equity crowd­fund­ing cam­paign with See­drs,” he says. “As more bikes than cars are now sold in Europe and the US, the de­mand for hel­mets is in­creas­ing and we’re start­ing to work with dis­trib­u­tors, agents and some of the 1,000+ bike schemes around the world.” The Tem­ple range of be­spoke mod­ern bikes has and cap­tured­now Matt the Mears imag­i­na­tio­nis ask­ing of cus­tomers,cy­clists, too, friends, sup­port­ers and sup­pli­ers to help him grow the busi­ness by mak­ing equity in­vest­ments on the CrowdCube plat­form. “We run our op­er­a­tion from our work­shop in Bris­tol - we use light­weight and durable steel frames that are painted by a lo­cal bike paint­ing spe­cial­ist and com­bine this with qual­ity com­po­nents such as Brooks leather sad­dles, hand-built wheels, punc­ture-proof tyres and high-spec gear­ing. “We’re look­ing to ex­pand the busi­ness, with a goal of £150,000 to­wards even­tu­ally cre­at­ing 12-20 new roles, in­clud­ing me­chan­ics and ad­min staff, and to fund mar­ket­ing, which is some­thing we’ve not re­ally done so far. We’re also keen to at­tract cy­clists who just want to buy into what we’re do­ing, who hope­fully like our prod­ucts and want to in­vest what­ever they can. It would be great if among those in­vestors we at­tract peo­ple with ex­per­tise we can call upon in busi­ness pro­mo­tion as well as those who are just cy­clists that love bikes.” For a min­i­mum amount of £10 they can buy share cer­tifi­cates in Tem­ple and, in re­turn for fund­ing fur­ther mar­ket­ing man­u­fac­ture,of a grow­ing brand com­pany, ex­pan­sion these and ‘par­town­ers’ will qual­ify for life­time dis­counts or even be­spoke bi­cy­cles and mer­chan­dise de­pend­ing on the level of in­vest­ment. “In­vest­ing in start-ups comes with an el­e­ment of risk, too,” ex­plains Mears. But to re­duce ap­peal­ing, that the risk gov­ern­men­tand make crowd­fund­ingset up SEIS (Seed more En­ter­prise In­vest­ment Scheme). “If you’re an SEIS-regis­tered start-up then those who in­vest in you can claim 50% of their in­vest­ment back against in­come tax within the first year – there’s also a pro­tec­tion scheme that guar­an­tees an­other 30% of your in­vest­ment is re­turned in the event of the start-up go­ing bank­rupt.” (Just as this is­sue of Ur­ban Cy­clist hit the print­ers, Mears con­firmed they raised a stag­ger­ing £200,000 in just four days.) It’s that el­e­ment of risk that dis­suades as many as it at­tracts. De­spite the buzz about it in the cy­cling cafes, not ev­ery crowd-sourced ini­tia­tive sees the light of day. The com­monly cited statis­tic for Kick­starter is that 9% of projects launched on the site never reap re­wards – re­ports sug­gest that fewer than half of all crowd­funded ini­tia­tives ever reach their tar­get. “The main pit­fall is that you won’t have reached your goal be­fore the cam­paign ends and you would have wasted a lot of time and en­ergy get the cam­paign ready,” ex­plains Woolf. “The key is to have faith in your prod­uct, and to build a good and hon­est cam­paign.”

Lost in the crowd

In some cases lit­tle more than face is lost and dreams are dashed when the fund­ing fails to ma­te­ri­alise or the time runs out. Cy­clist and canal boat dweller TR McGowran saw his 2015 Crowd­fun­ drive to raise £10,000 for a Bi­cy­cle Barge, a float­ing bike work­shop trav­el­ling across Lon­don along the Grand Union canal, fail de­spite him hav­ing the hulk of a boat ready to re­furb. The ap­peal ac­crued just £400 in pledges. But even if the crowd­fund­ing hits its tar­get, that is no guar­an­tee that cy­cling fans turned in­vestors are on to a win­ner. In 2008, Dublin-based en­gi­neer Barry Red­mond teamed-up with a silent part­ner cy­cling pal to form the Brim Broth­ers and de­velop a new type of power me­ter – one with a USP of be­ing in­trin­si­cally and in­no­va­tively in­te­grated into a cy­clist’s shoe cleats. By early 2016, af­ter al­most eight years in devel­op­ment and with Barry now the sole force be­hind the project, pro­to­types of the Zone DPMX power me­ters were wheeled out on to Kick­Starter as the broth­ers Brim sought to raise €100,000 from pre-sales and pledges. The pitch reaped in more than €383,000 in no time at all. Then the wheels came off. Barry Red­mond soon dis­cov­ered that what had worked in the de­sign lab­o­ra­tory wasn’t work­ing on the fac­tory floor. A long list of tech­ni­cal faults – in­clud­ing ones linked to the un­pre­dictabil­ity of how a cy­clist’s feet tend to flex when they pedal – couldn’t be over­come. The cost to pro­duce com­po­nents that might work es­ca­lated way

be­yond2016 Brim the Broth­ers amounts closed al­ready down raised. and In a Oc­to­ber­w­hole crowd of fun­ders – in­clud­ing Red­mond who’d ploughed his sav­ings into the power me­ters – were left with noth­ing to show for it. Of course, it’s in no-one’s in­ter­est for a fund­ing drive to fail – least of all those who are host­ing it. “If en­trepreneurs raise money through a crowd­fund­ing cam­paign we charge a small fee (5%),” ex­plains Joel Hughes, UK Head of Tech­nol­ogy at Indiegogo. “There are also third-party fees for pay­ment pro­ces­sors, which vary de­pend­ing on the pay­ment method.”

Not without risk

In the build-up to their (suc­cess­ful) cam­paign, Matt Mears spent tens of hours pre­par­ing the bid, fully aware of what was at stake as he sought to take Tem­ple Cy­cles to the next level. “We’ve got a solid rep­u­ta­tion and a strong base when of you’re sup­port look­ing­but at get­ting equity fund­ing, your busi­ness plan is scru­ti­nised much more closely than when you’re putting a new prod­uct out there.” Get­ting the ex­po­sure to a wealth of of­ten wealthy cy­cling en­thu­si­asts, all keen for a slice of the next big thing, has made sites like CrowdCube an at­trac­tive mar­ket place for es­tab­lished brands as well as start-ups. Huez raised £250,000 to fund fur­ther devel­op­ment through a 2016 crowd­fund­ing ap­peal, and Nick Hussey, the founder of Vulpine, thanks all those who wanted to be ‘part of the jour­ney’ for con­tribut­ing to a hugely suc­cess­ful in­vest­ment drive on CrowdCube in 2015. “Cy­clists are devo­tees and I think that’s a key fac­tor when you look at what works in crowd­fund­ing. We’ve got some very big in­vestors on board, but also many who’d buy into us stat­ing how much they just wanted to be a part of what Vulpine stands for,” says Hussey. “I got to know the CrowdCube founders; they’re cy­clists and I was rid­ing in the Alps when the cam­paign launched and I saw on my phone what was hap­pen­ing – we’d ini­tially had a tar­get in mind of a quar­ter of mil­lion, but in five days we’d upped that to £500,000 and achieved that.” The ap­peal closed af­ter two weeks with Vulpine £1,026,280 the richer for it. Not ev­ery­one shares the joy when es­tab­lished cy­cling mer­chan­dis­ers do well though it seems. “When main­stream brands crowd­fund, I find that it’s a bit un­be­liev­able,” says Lau of SpeedX. “Be­cause start-ups are the ones that first need a foun­da­tion, a pro­to­type­r­e­ally for them.”and don’t have that much cash, it’s But there’s no place for sen­ti­ment in busi­ness, even among a so­cially aware bunch like cy­clists. En­sur­ing that your ground­break­ing idea isn’t sim­ply copied and sold else­where once you go live is a con­cern that Joel Hughes has sought to ad­dress. “Since ours is an open plat­form, en­trepreneurs may find cam­paign prod­ucts, ideas or com­pany names sim­i­lar to theirs – when we re­ceive a copy­right in­fringe­ment com­plaint, we re­view it and may re­move the in­fring­ing con­tent or dis­able user’s ac­cess to the cam­paign in vi­o­la­tion.” Hughes points out that it’s still early days for crowd­fund­ing and there are is­sues that have to be ironed out, but that the fu­ture for it among cy­clists es­pe­cially looks rosy. “Ev­ery­one can be an en­tre­pre­neur, crowd­fund­ing truly is ac­ces­si­ble to any­one and can help them not only fund projects, but also grow and strengthen their com­mu­ni­ties.”

Left Tem­ple Cy­cles are look­ing to batch pro­duce steel frames in the UK

Above Mor­pher’s fold­ing hel­met is now in mass pro­duc­tion

Left Tem­ple Cy­cles’ founder Matt Mears (with work­shop man­ager James, right) spent months plan­ning his fund­ing cam­paign Right WingLights at­tracted fund­ing from ‘ Dragon’ Nick Jenk­ins

Left Tem­ple Cy­cles and founder Matt Mears raised £ 200,000 in just four days

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.