Cowboy, a Brussels-based company that designs and sells electric bikes found in major European cities, has closed a small strategic funding round of €5 million (about $5.5 million at current exchange rates), which includes a €1 million debt facility.
While the amount is not as impressive as Cowboy's previous funding, the company was looking for investors outside of the traditional European venture capital firms already invested in the startup, investors that could open new doors. As a result, the round was led by Cypress Capital. The Hong Kong-based investment firm has strong ties to Taiwan, a key hub for the global bicycle industry.
“For historical reasons, a lot of our Asia-based suppliers are Taiwanese. About half of our parts come from European suppliers, so we are continually increasing the proportion of European suppliers. But the other half comes from Asia, mostly Taiwanese suppliers,” Cowboy co-founder and CEO Adrian Roos (pictured above right) told TechCrunch.
Existing investors Index Ventures, Hardware Club, Future Positive Capital, Isomer and Exor will also rejoin Wednesday's funding round. Cowboy will also be launching an equity crowdfunding campaign to offer customers the opportunity to invest in the company.
“We start from 10 euros [million] “And we've raised €20 million a year for the last few years,” says Roos, “and it's certainly gone down. Last year we raised €8 million in equity and €5 million in debt. And now we're announcing a €5 million raise, which is a pretty small amount for a company our size.”
He said the company has lower capital needs and will need to raise less. Cowboy is on track to break even on an EBITDA basis in the second half of this year. Next year, he said, the company should be profitable for the first time in its history.
“We don't want to raise more money than we need, especially in these market conditions,” Roos added. That doesn't mean Cowboy won't raise more in the future, but it's been a rollercoaster ride for the startup, as the e-bike industry saw a big surge in sales after the COVID-19 lockdowns. The company's valuation peaked around that time.
But then demand plummeted. VanMoof, another European e-bike startup backed by venture capitalists, declared bankruptcy, sending a chill down the entire industry.
This latest round of funding values Cowboy at €40 million pre-money, but the focus now is not on the company's valuation but on its profitability. “We're starting to see rays of sunshine after the rain,” Roos said.
Believe it or not, rain plays a key role in Cowboy sales. The company typically sees a surge in bike sales in the spring, when people start thinking about biking to work or other places. This year has been especially rainy in Europe, and Cowboy sales have been a bit disappointing.
Additional Cowboy Form Factor
The company initially focused on one model and iterated on the design over the years: the Cowboy 1 was followed by the Cowboy 2, Cowboy 3 and Cowboy 4. The company is now moving away from numbers and expanding the lineup to other form factors.
To appeal to a wider range of riders, Cowboy has added cruiser and step-through versions, models with an upright riding position, and this year, the company added the Cowboy Cross model, an all-road model aimed at comfort and long-distance travel.
Similarly, Cowboy has diversified its distribution channels. In addition to its online store, Cowboy now sells its e-bikes in traditional bike shops. “Since last year, we've started partnering with local bike shops. The fact is that 80% of e-bikes sold in Europe still come from these bike shops, so we want to take advantage of that,” Ruth said.
Behind the scenes, Cowboy Bikes share the same electronic platform and software features, including theft alert, collision detection, in-app challenges and AdaptivePower, a recently updated feature that automatically adjusts motor power depending on current incline and wind conditions.
“We've put a lot of time, effort and capital into building a platform that works really well, and now we want to leverage that and essentially build a family of products,” said Ruth. “We have classics, cruisers and 'cross. You'll be seeing a lot more bikes from us in the future.”