Due Diligence For

CROWDFUNDING

Company Overview –

Pedal Anywhere is a bike rental company in Seattle and Friday Harbor, WA. They offer quality bikes, low rates, and free on demand delivery.
*Souce: seedinvest

Company Investment
Name: Pedal Anywhere Minimum Raise: $100K
CEO: Zach Shaner Maximum Raise: $750K
Company Founded: 2013 Structure of Raise: Crowd Note, 20% Discount
Location: Seattle & Friday Harbor, WA Valuation: $3M Valuation Cap
Crowdfunding Portal: seedinvest Minimum Investment: $500
Crowdfunding Link: https://www.seedinvest.com/pedal.anywhere/pre.seed  
Website: http://pedalanywhere.com/  

Review Overview

Positives Risks and Reservations
$196k revenue to date from 2,300 customers and steadily growing Seasonal affected business
Terms include 20% conversion discount and 6% interest Target market is confined to major metropolitan cities
Targeting both B2C & B2B. B2B corporate accounts could provide steady revenue $50-100k per city expansion cost
Bootstrapped up until this point Currently only servicing Seattle

Problem

Traveling with your bicycle is prohibitively expensive and requires technical assembly knowledge, so most travelers leave their bikes at home.

Solution

Current:
Pedal Anywhere solves these problems by providing high-quality bikes that are fully customizable for a rider’s desired accessories, size, and style. By delivering them on demand and operating 7 days per week, they remove the traditional pain points that travelers experience when trying to locate an adequate rental shop in an unfamiliar city.

Long Term:
Pedal Anywhere has near-term expansion goals to Portland, San Francisco, & Vancouver BC. They have medium-term expansion goals to Denver, San Diego, Austin, Chicago, Toronto, Montreal, Boston, New York, Philadelphia, & Washington DC. Pedal Anywhere is also pursing partnership opportunities with colleges and universities to provide student rental bikes, corporate fleets, and municipal governments.

Business Model

The mission of their business model is to harness economies of scale to earn 10x in revenue per year over the capital cost of each bike. Their goal is to utilize periodic resale of the bikes to obtain profitable capital replacement so that once each city’s fleet is at scale, ongoing capital inputs are effectively free and the product is always new.

Rental rates range from $39-$449.

Traction

  • 2,350 customers
  • $196K in revenue
  • $84 of revenue per customer
  • $131 of revenue per transaction
  • Number 2 & 3 organic SEO in Seattle
  • 55% bootstrap income growth YOY
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

  Zach Shaner Lucas Nivon
Position: CEO & Co-Founder Co-Founder & Advisor
Ownership Percent: 75.5% 24.5%
Linkedin: https://www.linkedin.com/in/zach-shaner-b0878820 https://www.linkedin.com/in/lucasnivon

Summary:
CEO Zach Shaner has done an excellent job bootstrapping the company up to this point. Lucas Nivon was the original founder but brought Zach on in 2013 to take over while Lucas pursued another business opportunity. Lucas remains an advisor that meets with the company monthly.

Zach is a first time Founder/CEO with prior experience in marketing and journalism. Although 1st time founders are always a gamble, Zach seems to be generating success. I think finding an additional experienced advisor or two would be highly beneficial to help with growth and ease learning curves.

Market Analysis

Industry: On-Demand Services

TAM (Total Addressable Market): $10M in Seattle, $21M in San Francisco
*Souce: Portal Page in Pitch Deck

Driving Trends:
Multiple cities have seen huge cycling growth since 2000. +306% in Portland, +234% in DC, +161% in Denver, +97% in Seattle

Industry Opinion:
With the population shifting and migrating to larger cities, transportation will be a continually growing market. The two major limitng factors with the bike rental model is the seasonitly effect from the weather, along with limiting the TAM to major metropolity cities. While this does reduce the overall TAM, the market is still quite large and other startups like UBER have been quite successful with these demographics.

Competition

Differentiator:
Pedal Anywhere differentiates from it competition with consistency of the quality of their bikes along with on-demand service eliminating any barriers to entry for their customers.

Main Competitors:
Pedal Anywhere believes their primary competitors are local bike shops and subsidized bike-share schemes. Each cities competitors will be different. They also believe instant delivery companies already at scale (Amazon, Postmates, Spinlister) could potentially be competitors if they pivot into their market.

Company Financials

Revenue to date: $196K

Revenue Last Fiscal Year: $94,293 (2016)

Previous Funds Raised: $0

Use of Funds

If the target amount is raised:

  • Executive compensation (18.7%)
  • Manager compensation (10.7%)
  • Fleet bicycles (20%)
  • Warehouse leasing (16%)
  • Tools, supplies, accessories (3.3%)
  • Delivery vehicles (3.3%)
  • Commercial insurance (2%)
  • Marketing (6.7%)
  • Bicycles maintenance (4%)
  • Debt service (0.7%)
  • Legal & licensing (6.6%)
  • Web & brand design services (3%)
  • Other (5%)

Exit Opportunities

With the model only proven in Seattle, Pedal Anywhere still has a long road before potential acquisitions. In their marketing plan, Pedal Anywhere acknowledges their intentions of partnering with other instant-delivery services with the intent of possibly being acquired. This mentality is always a good sign that the CEO is strategically looking to the future.

Recent Acquisitions in the Field

Date Company Acquired Acquired By Amount
May 2, 2016 CallAtHome DriveU Unknown
Nov. 9, 2015 Pickingo Shadowfax Technologies Unknown

Expert Opinion Summary

Pedal Anywhere has built a great business with excellent fundamentals. The $3M value cap that is offered appears fair, especially when compared to other recent crowdfunding offerings. One downside of the Crowd Note that is being offered, is that unlike a traditional SAFE or Convertible Note, the Crowd Note does not convert until an exit. This brings up an issue in the circumstance if Pedal Anywhere raises an additional round below a $3M valuation. Traditionally, investors in a SAFE or Convertible Note would convert at the valuation raised under $3M, not dependent on the exit valuation. In this circumstance, the upside potential is reduced for investors of the Crowd Note.

Pedal Anywhere has proven their concept in Seattle, but the cost of $50-100k per city to expand will require significant funding to scale at a mass rate. The company plans to use proceeds from this raise for near-term expansion to San Francisco, Portland and Vancouver. Scaling beyond just Seattle will add logistical difficulty for management, an advisor with experience in scaling an instant delivery business would be a reassuring addition.

Another player in the bike rental space Spinlister is a closer competitor than given credit. Splinlister takes an AirBnB approach to bike sharing, while Pedal Anywhere has chosen a model similar to UBER. Although these models are very different, they both offer the result of a rented bike. Pedal Anywhere is convinced that by offering a consistent product experience and instant delivery the UBER model offers a superior customer experience for bike rental.

I think the direction Pedal Anywhere is exploring with adding a B2B model is a great opportunity to provide consistent reoccurring revenue. In 2015 they carried out a Corporate Fleet test contract for $14.4k. They are looking to partner with colleges, larger companies, municipal governments and property management companies. These are all great opportunities to decrease the seasonality effect on revenue.

AngelList: N/A
Crunchbase: N/A

Disclaimer

Crowdfund Research and its authors do not offer investment advice, nor do we endorse or recommend investments in any company or the suitability of an investment for any particular investor. Crowdfund Research is not registered as a broker-dealer or financial or investment advisor and does not provide any services requiring such registration. The information in this report or on our website regarding any company is based on publicly available information or directly from the subject company.  Crowdfund Research makes no representation or warrant as to the adequacy, accuracy or completeness of such information. Any opinions or forecasts expressed herein are our own, are not intended as investment advice and are subject to change without notice. This report has been prepared solely for informative purposes and is not a solicitation of an offer to buy or an offer to sell any security.
This report or the posting of information on our website regarding any company, including any links to information on our website, should not be construed as an endorsement or recommendation of that company for any purpose whatsoever.  This report does not take into account the investment objectives, financial situation or needs of any particular investor, and each investor should consider whether any investment opportunity is appropriate given their investment objectives and current financial circumstances. Any person considering any investment in any equity crowdfunding investment whatsoever is encouraged to consult with their own investment or financial advisor, tax advisor and/or attorney beforehand.
All investments entail risk. The companies on our site are generally small or early stage companies and are subject to risks inherent in investing in any small or early stage company as well as other risks specific to their business and operations. In addition, securities of these companies may be highly illiquid, requiring that they be held for an indefinite period of time or have a limited market for resale. Therefore, no one should invest in any of these companies unless they have no need for liquidity of their investment and can sustain a total loss of their investment.  You should only invest an amount of money that you can afford to lose without changing your lifestyle.
You should thoroughly review the complete offering materials for any investment opportunity, particularly all risk factors, prior to investing in any offering and become familiar with the investor requirements, investment limits and your ability to resell the investment.  

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Jake Fisher
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Jake Fisher

Entrepreneur and Angel Investor. Along with founding Crowdfund Research, Jake is the Managing Partner at Venture Formations.
Jake Fisher
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