Darrell Cavens and Mark Vadon know what it takes to build a successful consumer company. The entrepreneurs helped grow not one but two online retail giants that went public, teaming up at Blue Nile starting in 1999 and then co-founding Zulily in 2009.
So when the duo decides to invest together in an up-and-coming Seattle startup, it’s worth taking note.
Rad Power Bikes has become one of the best-known e-bike brands in North America over the past four years without raising any outside capital. But with revenue projected to double to more than $100 million this year, co-founders Mike Radenbaugh and Ty Collins are ready to spark their business.
The company today announced an investment from Vadon and Cavens. Privately-held Rad Power Bikes did not reveal the size of the deal, instead describing the cash infusion as “significant.” Cavens is joining the board of directors as a result of the funding. The Securities and Exchange Commission, where privately held companies typically report the sale of unregistered securities, does not yet show a record of the investment.
In many ways, the e-bike business is much different than selling kids clothing or engagement rings. But Vadon and Cavens see a lot of similarities to Zulily and Blue Nile at their early stages.
“I see a business with super passionate customers, a cool product, and awesome entrepreneurs,” Vadon told GeekWire. “That’s what you want to be investing in.”
Radenbaugh, 29, and Collins, 30, are childhood friends from Northern California and the idea for Rad Power Bikes was born in 2007 when they built their first e-bike. After years of doing custom conversions of traditional bikes to electric, they launched their company in 2015, raised $320,365 in an Indiegogo crowdfunding campaign, and have been profitable ever since.
The startup now sells its e-bikes in the U.S., Canada, and 30 European countries to both consumers and commercial businesses in industries such as logistics, law enforcement, deliveries, and more. It 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 limited line of e-bikes that sell for around $1,500.
Radenbaugh said the company’s bikes are priced “at a point that’s approachable to people” — cheaper than high-end options from top brands such as Trek and Specialized, with more power and range than competing products from European companies.
Rad Power Bikes is also riding a wave of interest in electric bicycles, which has become the fastest-growing bicycle type in the U.S., where sales spiked 91 percent year-over-year in 2017. In addition, new forms of mobility are also “making privately owned vehicles obsolete,” Bloomberg reported last month. Rad Power Bikes describes itself as the largest e-bike brand in North America by e-bike volume.
“We’re in the business of giving cars an early retirement,” Radenbaugh said.
In an interview with GeekWire this week, Vadon and Cavens were unwavering in their optimism for Rad Power Bikes.
Based on financial metrics and outlook just four years in, Vadon said the company reminds him of his other early investments in companies such as online pet supply retailer Chewy, which sold for $3.35 billion in 2017, and Allbirds, the high-flying sneaker startup that is valued at more than $1 billion.
“This is going to be a very sizable business,” said Vadon, who is a board member at Home Depot and Seattle startups such as New Engen and Flyhomes.
Vadon met Radenbaugh through a mutual acquaintance. After his first ride, he was hooked.
“You feel like a 10-year-old,” Vadon said. “They are just a blast to ride.”
A large addressable market, from millennials to moms to retirees, gets Cavens excited about how much Rad Power Bikes can grow. Cavens, who left Zulily in September — the e-commerce giant was acquired for $2.4 billion in 2015 — said his wife was skeptical when he took her into the company’s Seattle retail store.
“She’s not a bike enthusiast and hadn’t ridden in 15 years,” Cavens said. “But she got on one and thought it was really fun. When customers get exposed to this, the connection is immediate.”
Rapid innovation in technology — batteries, motors, controls, production capabilities for electric bikes — has created a perfect storm for Rad Power Bikes. The ubiquity of the transportation option is helping, too, with thousands of shareable electric bikes from companies such as LimeBike that are easily accessible and can lead customers to investigate owning their own.
“We’ve just hit a perfect tipping point,” Radenbaugh said.
The challenge for Rad Power Bikes is managing growth and inventory. The company, which has physical stores in Seattle, Vancouver B.C., and the Netherlands, plans to double its 100-person workforce and expand into more markets. It is also relocating its HQ and showroom across Seattle’s Ballard neighborhood to a significantly larger building this week.
Vadon and Cavens, both longtime entrepreneurs and angel investors in Seattle, aren’t forming a fund together but both plan to continue participating in the local ecosystem.
“I remember Mark telling me when we started Zulily that our most limited resource was time. How do we put our time to where our biggest opportunities are?” Cavens said. “Joining the board at Rad Power Bikes — this is worthy of a tremendous amount of time and has potential to become something really special based here in the Northwest.”