Electric motorcycle company Cake held talks with Harley-Davidson and other automakers in 2023 as it fought to stay alive, founder and CEO Stefan Ytterborn told TechCrunch in an interview Tuesday.
The talks, which have not been previously reported, ultimately did not pan out for the Swedish startup, which slid into bankruptcy last week. Still, Ytterborn said he hopes to find a way to make it through the bankruptcy process and emerge with a partner on the other side.
“I’ve had 40 meetings in the past three days,” Ytterborn said, adding that most have been with two-wheeler brands. They’re “interested in finding out if there’s a chance for us to do something” together, he said.
Cake raised $14 million in its Series A round in 2019, composed of mostly venture funding, with the goal of building high-design electric motorcycles and mopeds at scale. It followed that with a $60 million Series B round in 2021 led by Swedish pension fund AMF, giving the startup some institutional backing. Ytterborn said his company began trying to raise a Series C as early as August 2022 and that he expected to be able to close with a similar mix of institutions and a few VCs.
But by the end of that year, VCs were pulling back in a big way, and closing a Series C suddenly looked a lot harder. “We had lots of interest, but no one stepped forward,” Ytterborn said. “The whole space just collapsed.”
Cake shifted its focus away from European investors and toward those based in North America in late 2022 and early 2023, according to Ytterborn. Any headway the company made ended in spring 2023 with the Silicon Valley Bank crisis, which spooked anyone who showed interest, he said.
Cake hired Deutsche Bank and investment bank Numis (which Deutsche Bank later acquired) and started pitching automakers, including Harley-Davidson. Ytterborn said he found most of them to be “super receptive,” and while he wouldn’t go into detail about who else Cake pitched, he said the company was looking at a range of options, including investments and strategic partnerships.
Teaming up with a carmaker might have made the most sense, especially given the increasing restrictions in city centers across Europe, Ytterborn recalled. “They’re well aware that if they don’t expand their portfolio, [and bring] in something that would be actually physically present within the urban landscape, they’re going to miss out on that last-mile reality,” he said.
Cake wasn’t able to bring a deal to fruition and instead had to focus on “extending runway,” Ytterborn said, which included being “spoon fed” by the lead investor of the Series B round, the Swedish pension fund. That runway ran out last week, when Ytterborn said Cake came to the “horrifying reality” of having to file for bankruptcy.
The bankruptcy process in Sweden is similar to how it works in the United States; a trustee has been appointed to make sure that Cake’s creditors are made as whole as possible.
But, Ytterborn said, “there’s no reason to try and destroy” the business. “Our intention from a management perspective is to find a partner who’s willing to invest in [the] company and management, for us to restructure and continue the journey going forward.”
With interest rates still high, and micromobility companies going out of business seemingly every month, that could be a tall task. But while it may have been easier to raise money at the beginning of Cake’s life, Ytterborn didn’t sound particularly fond of that environment in hindsight.
“I think that 10 years from now, we’ll be looking back at the years between 2017 and 2022 with a bit of a laugh, looking at how horrendous it turned out,” he said. “Right now, I think that we’re fighting our asses off trying to find a way forward.”