London-based cargo bike delivery service Pedal Me entered administration last week, after it failed to reach a deal with the British tax authority, HMRC, over debts. The business was then bought back from administrators, meaning it will continue trading.
However, crowdfunding investors who put money into the start-up have been left with nothing; its three rounds of crowdfunding have raised hundreds of thousands of pounds for the company over the last few years. Its last round, in 2021, raised £584,711.
An email to investors - seen by Cycling Weekly on Friday - revealed the shock news. Its co-founder, Ben Knowles, wrote: "Frustratingly — even though company productivity has never been higher than over the last few months — with earnings per staff hour running 20 per cent up on a year ago, and gross margins improving to around 50 per cent — the amount of debt we have means that we were unable to accept further investment in the current company without a workable payment plan for our debts with HMRC.
"Despite tireless efforts, we’ve been unable to reach a viable agreement with HMRC — which means there is no realistic chance of trading out of the current debt, even with those offers of investment and ongoing improvements in productivity.
"Having exhausted all alternative options, we have been forced to put the company into administration. At the same time, a group of existing shareholders bought the company assets back from administration as a going concern — preserving the jobs, the service and the mission."
Pedal Me was founded in 2017 by Knowles, Rob Sargent and Chris Dixon, offering an environmentally friendly way to deliver goods around the capital, using e-cargo bikes from Dutch company Urban Arrow, which have been used for everything from Christmas trees to furniture.
People who invested money in Pedal Me will undoubtedly be frustrated to lose money to the start up. In a statement shared with CW on Friday, Knowles wrote that the company was determined to continue to "transform cities".
"Obviously this has been an incredibly difficult decision, but importantly, the shareholder buyout means we can continue without any interruption in service for our customers," he said.
"The increased liquidity that comes with this process mean we can secure the future of Pedal Me, and move forward with our plans for improving service during busy times and the tech improvements we’ve got lined up. We set Pedal Me up with the intention of transforming cities and I am absolutely determined that we continue our mission to do so."
Cargo bike delivery services have become more popular in recent years, with Pedal Me an early example of the trend. Other brands like Zedify do something similar, while delivery giants like DHL have also turned to two wheels in an effort to be greener, and also potentially faster, in cities.
