After a pandemic year that spurred huge demand for its e-bikes, Rad Power Bikes is raising $150 million to fuel growth.
It’s the largest investment in an e-bike brand and reflects investor confidence in a global electric bike market expected to nearly double in size to $70 billion by 2027.
Profitable and growing, Rad CEO Mike Radenbaugh said that the minority investment will help the company on its mission to “democratize the electric bike.” He declined to share an updated valuation.
“We were needing to step up to the plate,” said Radenbaugh, who as a kid in rural northern California tinkered with electric bikes to cut down on his 16-mile commute to school. (Listen to Radenbaugh’s full entrepreneurial story in the How I Built This podcast).
From its humble bootstrapped roots, Rad now bills itself as the largest e-bike brand in North America. The fresh cash will be used to help expand its global footprint, which includes three showrooms and 11 service stations. The company, headquartered in Seattle’s Ballard neighborhood, also plans to double its 325-person headcount this year.
Rad — whose e-bikes top out at 20 miles per hour without added pedal assistance — claims 200,000 riders across more than 30 countries. It also sells to more than 1,000 commercial customers, including national pizza chains, food delivery companies, rental fleets and tech companies who use the bikes as transportation options on corporate campuses.
Interest in bikes surged as the pandemic hit and people looked for new ways to travel and exercise. Rad saw sales spike nearly 300% year-over-year in April. The company did not disclose revenue metrics for 2020; revenue for 2019 was around $100 million. It delivered a record number of bikes last year, though Rad also had trouble fulfilling some orders as demand outpaced expectations.
“We did experience challenges, but overall the team is really proud of the number of people we got into the Rad Power Bikes family,” Radenbaugh said. The company declined to disclose 2020 revenue.
The startup has taken advantage of the direct-to-consumer model to shorten its supply chain, bypass traditional bike shops, and create a tight feedback loop with customers to constantly improve its line of 11 e-bike models that sell for around $1,500.
It faces competition from a number of other e-bike makers including Priority, Trek, Aventon, Blix, Biktrix, Specialized, and the Electric Bike Company, among others.
Beyond the pandemic, Radenbaugh said Rad is seeing other tailwinds such as government support of safe mobility options, such as closing down streets for bikes and walking traffic. He added that e-bikes are a “resilient form of transportation.”
“They’re very accessible,” he said.
Rapid innovation in technology — batteries, motors, controls, production capabilities for electric bikes — has also created a perfect storm for Rad. The ubiquity of the transportation option is helping, too, with thousands of shareable electric bikes from companies such as Lime that are easily accessible and can lead customers to investigate owning their own.
The e-bike industry does face some vulnerabilities. Electric bike and scooter imports were hit with a 25% tariff in 2018 as a result of President Donald Trump’s trade war with China, though e-bikes were excluded from the rule in 2020. And the related electric bike-sharing industry, though heavily funded, remains untested. Bike-sharing startups in the U.S. and China have contended with layoffs, a shifting landscape, and in several cases shut down altogether.
Rad previously raised just over $25 million. The new round includes big-name investors such as Counterpoint Global (Morgan Stanley), Fidelity Management & Research Company, The Rise Fund, the global impact investing platform managed by TPG, and funds and accounts advised by T. Rowe Price Associates. Previous backers Durable Capital Partners and Vulcan Capital also participated.
Rad’s other investors include Blue Nile and Zulily co-founders Darrell Cavens and Mark Vadon, who made an undisclosed investment in 2019.
“Addressing last mile delivery and short duration travel is critical to decarbonizing transport,” Marc Mezvinsky, business unit partner at TPG, said in a statement. “Rad Power Bikes has created a premium quality, reliable, and fun solution that improves mobility, reduces greenhouse gas emitting vehicle usage, and encourages healthier living through outdoor activity and exercise.”