Funding an Electric Bike Startup in Santa Cruz, CA

elliothaughin

elliothaughin

100 mW
Joined
Feb 28, 2011
Messages
38
Hey Guys,

After over a year of research here I've decided to take the plunge and seriously invest in an electric bike company.

With around $600,000 of liquid capital over the next 4 years I'm looking to design, engineer, build, test, and produce world class high performance electric bikes right in the heart of California: Santa Cruz.

This is mainly a post to reach out to people in the area, starting this summer I'm looking for people to partner and work with.
Whether that be through traditional employment, supplier/piece work agreements, or even founding members with stakes.

I'm going to be documenting the whole process of founding this company, and the design to production of our first model the 'Conception'.

Although this forum is great, I want this startup to be known by a much wider audience than the hardcore and awesome enthusiasts we have here, so it's all going on through Google+:

vMotive Bikes - https://plus.google.com/b/112035591432418610666/112035591432418610666/posts

If you're interested in finding out more about me, or some or if you have some of talents and passions we're looking for and live nearby, drop us a line on the google page.
 
For the first model, I'm looking to develop a tough full suspension high powered electric mountain bike.

From this first high end model, we'd probably then look at branching off into lower powered and less expensive trail bikes, as well as stylish affordable hybrid and town bikes. This would open up production models to a wider consumer market at a lower price point.

The first step though is to find the right minds to collaborate on the development of the first model. The flagship high performance extreme electric bike. I believe that there are people in the area more than capable of creating one of the best electric bikes in the world.

This is why I've decided to invest everything into this, because I really do believe in it.
 
I am in SC.
 
liveforphysics said:
I am in SC.
Click to expand...

And you're one of the most renowned and expert members on this forum. We should meet up in a few months when I get to the city, I'd love to come see some of your work.

<3 Santa Cruz.
 
An ambitious project, best of luck.

I'd recommend listening to the EV Nerdcast podcast episodes 19-21 with Justin of ebikes.ca (http://troyrank.com/). He has a wealth of knowledge from 8+ years of business selling ebike kits and batteries.

From my experience helping to set up an ebike business for past 2 years, it can be a super easy way to lose all your money fast or you can slowly build a profitable business over time. With the right team & planning, I believe you can achieve the latter.
 
I've had about 10 Santa Cruz bikes in my life, and still own 2 at present day. May you follow the footsteps of those who made the name of your city, synonym with quality and performance ride to all the mountain riders in the world. I wish you success, and hope to see some day a mountain Ebike that will make me think it is better buying this one than making my own.
 
SC is a great place to kindle a spark. The people there are very green minded. Best of luck! I'll be watching for you!
 
Sounds awesome! Are you planning on making a legal bike or "off road only"? Hub motors or bottom bracket drive?

This ebike space is so crowded you really need to differentiate your flagship bike with custom motor/controller/batt/bms/display. The problem is once you do all that the price starts to approach a full size electric motorcycle. Source in asia but assemble local. I would try to be the apple of ebikes with a minimalist hidden wire design. I'm located in San Francisco. Also realize the diy guys are always going to say it's too expensive or too slow (especially if you don't have an off road mode), but dont realize guys plop down 5k on a mountain bike every few seasons.

Pi cycles in Sausalito has really differentiated themselves with the dumb frame design which sells well in luxury stores. I would receommed making it look like a regular bike, not a fu fu yuppie bike, and not like a a mini motorcycle stealth bomber or phasor cycles bike. Take a look at grace cycles. They suck too along with the optibike. There is definiteky a big niche for a high performance light weight ebike that looks like a bike. There are some hard core mountain bikers in SC, but they are pretty gnarly old school bros. Is your target demographic old men or 16up?
 
Wow, thanks very much for your support guys.

I'm just finalising my immigration paper work now. I can't wait to get started, but I'm not planning a penny until I get the expertise on board with us.
I know I'm not an Engineer, I'm not a designer, or an Electronics guy. So every aspect of creating this bike will be from the most expert in the area in their field.

A bit of background about me: I'm actually a computer scientist with a strong belief in future technologies. One thing I am planning on doing as part of my role in the company will be to build a custom dashboard and central computer. I work for a nearby technology company in the valley.

I'm planning to invest everything I can to start this company. I don't want to try to hit the mass market immediately, which would be too greater challenge to create any real penetration into it. Instead, the plan is to focus on a more extreme end of the market for the first model.

This will really help to form the platform for a small scale but efficient production at a really high level of quality.

Moving forward, the goal would be to then expand the range to include a wider potential customer base. These would most likely include some road legal electric bikes, although it would be an expensive legal process to declare them as such. For the shorter term, I believe it would be best to simply define them as off road only until revenue was such that we could invest in legal classifications.

Using the processes and systems developed in the first top of the range model to be used in the lower end of the range.
This way, the technology, manufacturing, and design enhancements right at the top of the range are implemented right down to the most affordable in the range. This works in a similar way to how many very successful car manufactures operate on a much larger scale.

I'm not really planning on actually getting the team together to start designs till the Winter. By this time, I'd have spent the first part of the investment to rent a suitable workshop nearby with access to basic tools and equipment. Moving forward, we may rent higher end equipment for short periods to manufacture set numbers of specific pre-designed components.

This will help lower the otherwise large initial capital commitment required which usually serves as a high barrier to entry into the market.

I know how to make the finances work, and how the actual bike is designed, built, developed, manufactured, tested, iterated... well, that's all down to specialists to decide. I know my strengths, and with the amount of research I've done I can certainly see all of yours.

Does that sound like a reasonable way to go about starting this?
 
Good luck; however having started, developed and sold quite a few businesses in a variety of fields I think you're underestimating the investment necessary to take this off the ground.

How did you come up with the $600k figure? What about $95k? Are they based on anything other than what you think you can or should invest?

Judging by what you said about the legal hurdles with making your bikes road legal, I am not sure you've done enough research to start with.

In any case, good luck! If you have any business related questions, feel free to PM me.

elliothaughin said:
Wow, thanks very much for your support guys.

I'm just finalising my immigration paper work now. I can't wait to get started, but I'm not planning a penny until I get the expertise on board with us.
I know I'm not an Engineer, I'm not a designer, or an Electronics guy. So every aspect of creating this bike will be from the most expert in the area in their field.

A bit of background about me: I'm actually a computer scientist with a strong belief in future technologies. One thing I am planning on doing as part of my role in the company will be to build a custom dashboard and central computer. I work for a nearby technology company in the valley.

I'm planning to invest everything I can to start this company. I don't want to try to hit the mass market immediately, which would be too greater challenge to create any real penetration into it. Instead, the plan is to focus on a more extreme end of the market for the first model.

This will really help to form the platform for a small scale but efficient production at a really high level of quality.

Moving forward, the goal would be to then expand the range to include a wider potential customer base. These would most likely include some road legal electric bikes, although it would be an expensive legal process to declare them as such. For the shorter term, I believe it would be best to simply define them as off road only until revenue was such that we could invest in legal classifications.

Using the processes and systems developed in the first top of the range model to be used in the lower end of the range.
This way, the technology, manufacturing, and design enhancements right at the top of the range are implemented right down to the most affordable in the range. This works in a similar way to how many very successful car manufactures operate on a much larger scale.

I'm not really planning on actually getting the team together to start designs till the Winter. By this time, I'd have spent the first part of the investment to rent a suitable workshop nearby with access to basic tools and equipment. Moving forward, we may rent higher end equipment for short periods to manufacture set numbers of specific pre-designed components.

This will help lower the otherwise large initial capital commitment required which usually serves as a high barrier to entry into the market.

I know how to make the finances work, and how the actual bike is designed, built, developed, manufactured, tested, iterated... well, that's all down to specialists to decide. I know my strengths, and with the amount of research I've done I can certainly see all of yours.

Does that sound like a reasonable way to go about starting this?
Click to expand...
 
Good luck and go for it! If you think you can do it then go ahead and do it :)

Sent using Endless-Sphere Mobile app
 
If you'd like to take a peek at my previous posts, I've been working on perfecting the ultimate e-bike design for the last few years. I've completed a drivetrain test bike and it works really well but I lost the interest of my initial investors and am too busy surviving to continue development. I recently dismantled and sold off most of the components of my mobile, solar powered e-bike development lab and am renovating a 1977 19ft rv to live in. Basically, I'm giving up on the e-bike thing for now. However, I still have all of the parts, materials, and designs to build a sub 75 lb, pedalable, extremely off road capable e-bike with all enclosed belt drives and some very unique, patentable ideas. I'm trying to get everything ready so I can spend the summer in the northwest, hopefully meet some cool people, and play some music with friends but if you're interested in getting a huge head start in product development, I'd be more than willing to share my parts, designs, and materials for a very modest fee. I want to see my bike get produced and I think many others do too but I have put so much into it that I really need a vacation so that's what I'm focusing on for now. I'm also waiting for a company to step up and sustainably produce batteries, motors, controllers, and bike parts and distribute them with good customer service. The lack of suppliers with these qualities has been the major hindrance to my plans. Feel free to pm me if you have any questions and best of luck whatever path you choose!
 
eugenem said:
Good luck; however having started, developed and sold quite a few businesses in a variety of fields I think you're underestimating the investment necessary to take this off the ground.

How did you come up with the $600k figure? What about $95k? Are they based on anything other than what you think you can or should invest?

Judging by what you said about the legal hurdles with making your bikes road legal, I am not sure you've done enough research to start with.

In any case, good luck! If you have any business related questions, feel free to PM me.
Click to expand...

This is also a very good point. It has taken about $100k to get to the point I have reached and it is just a drop in the bucket. I have done extensive research and from that research, I've concluded that an investment of upwards of $3 million would just barely get a company like this off the ground with any chance of growth and survival. If there's any chance for success in this game, adequate funding will need to be available to provide for the proper legal protection, marketing, equipment, staff, and basically economy of scale necessary to develop something profitable and affordable to the masses. Prototyping and compliance with legal hurdles is not cheap.
 
http://endless-sphere.com/forums/viewtopic.php?f=9&t=30649
 
Off the top of my head I can think of 4 or 5 companies building high end off road ebikes. And the big players are starting to get in on it too.

Not to discourage you, but I think you might want to think of something to set your self apart.

I was quite enamored with one of our members here who wanted to create an open source FS non-frock frame that took all the hard work out of building an ebike. You just bought the frame and bolted on whatever components you wanted. No welder or special skills needed to build a high quality ebike. I could see tons of pluses for this. It'd be affordable for you and the user. You wouldn't have to spend half your budget developing and testing battery packs. You wouldn't have to worry about warranty issues. You wouldn't have to worry about legal issues since you are just selling frames and maybe drive train components.

Lots of companies are going this route. Selling a framework, and letting the community to the rest of the work. From quad-copters to arduinos. I dunnu, that's what I THINK would be the best use of your rather limited funds. I'm like you; my vision is unlimited but my skill set is actually pretty narrow. A fresh company building a bike from the ground up is going to take a ton of work and money. So you'll probably end up using off the shelf components. So why not just skip the headache of being the guy testing and dealing with all the random parts you need to get it running.

Just look at the attention max and hal got for their purpose built ebike frames! Probably every one here would and could drop a grand on a frame that just needed a easy to bolt on motor and battery pack. It'd make life soooo much easier. Probably easy enough for my lawyer brother in law who has been asking me how to build an ebike to do it.
 
auraslip said:
Off the top of my head I can think of 4 or 5 companies building high end off road ebikes. And the big players are starting to get in on it too.

Not to discourage you, but I think you might want to think of something to set your self apart.

I was quite enamored with one of our members here who wanted to create an open source FS non-frock frame that took all the hard work out of building an ebike. You just bought the frame and bolted on whatever components you wanted. No welder or special skills needed to build a high quality ebike. I could see tons of pluses for this. It'd be affordable for you and the user. You wouldn't have to spend half your budget developing and testing battery packs. You wouldn't have to worry about warranty issues. You wouldn't have to worry about legal issues since you are just selling frames and maybe drive train components.

Lots of companies are going this route. Selling a framework, and letting the community to the rest of the work. From quad-copters to arduinos. I dunnu, that's what I THINK would be the best use of your rather limited funds. I'm like you; my vision is unlimited but my skill set is actually pretty narrow. A fresh company building a bike from the ground up is going to take a ton of work and money. So you'll probably end up using off the shelf components. So why not just skip the headache of being the guy testing and dealing with all the random parts you need to get it running.

Just look at the attention max and hal got for their purpose built ebike frames! Probably every one here would and could drop a grand on a frame that just needed a easy to bolt on motor and battery pack. It'd make life soooo much easier. Probably easy enough for my lawyer brother in law who has been asking me how to build an ebike to do it.
Click to expand...

Hey Auroslip, that's exactly the sort of input I'm looking for. If people can really see where a company with this amount of finance can make some headway into developing some great products, then I'm all ears.

What you say does make sense. But I think that offering things other than the frame (such as the corresponding motor and controller) would also be feesable and fairly inexpensive to offer.

I'm certainly not wanting to go down the routes of developing our own hub motors/controllers/battery systems, but using existing products from other suppliers for much of these would be feasible.

However, one strength of this community is really getting to grips with the inconsistencies of these 3rd party products and providing engineering solutions to really get the most out of them.

Whether it's water-resistant coating in motors, or upgrading controllers for the most efficiency or power, there are people around who can provide a simple ways to massively improve these product.

In terms of manufacturing process, I'd like to try to tightly integrate the design process to the longer term goal of introducing new products. The goal would be to create products that are just an adaptation of other products. For example, create a hard tail frame as a second model that use the same design as its full suspension predecessor much as it can.

Or a lighter-use model that essentially just scales down the thickness of the frame and the depth of it,
but again, keeping the same overall shape in order to:

1. Begin to provide a recognisable design pattern throughout the range.
2. Cut down manufacturing costs by being able to reuse process', designs and components.
3. Allow a process of iterative improvements to the design of existing common components by engineering them into the next versions.
 
The world needs good ebikes. Lots of them.

Making them makes sense.
 
Elliot,

One again, you seem to be missing the problem in this scenario. The problem is that it will take quite a bit of money, more that you have budgeted so far to get the project off the ground. Not to say that it cannot be done, but working with limited funds, I guarantee, you will see your idea change quite drastically as you discover how much things cost. Think of the overhead involved in designing and manufacturing something like this! Think of the cost of research involved! For example, in the first two pages of this thread we went from something completely custom designed to custom designing some components and using some mass produced ones. You are correct that in most cases sourcing good quality parts from China is tough, given the unrealizable nature of Chinese manufacturers.

I highly suggest working your way through a lot of Chinese factories and making a visit to China in the near future. You will find it to be very useful and you'll see what you're dealing with.

I've been to China, if you're interested, can share some contacts I have there. It's not enough to take your project off the ground but I can refer you to OEM and ODM bike makers that can help you manufacture frames or even whole bikes based on your designs (I am not talking about the majority of factories there that just slap on a bunch of cheap parts on an even cheaper frame and call it manufacturing). I have a good contact among battery manufacturers. They have an actual factory (and not a sweatshop) near guangzhou where they can make batteries to your exact specifications.

In any case, think of how much a research trip, with samples, etc is going to cost and look at it against your proposed initial investment of 95k. It's certainly worth it but you'll need MORE to take a project of your caliber off the ground. That's all I'm saying :)

elliothaughin said:
auraslip said:
Off the top of my head I can think of 4 or 5 companies building high end off road ebikes. And the big players are starting to get in on it too.

Not to discourage you, but I think you might want to think of something to set your self apart.

I was quite enamored with one of our members here who wanted to create an open source FS non-frock frame that took all the hard work out of building an ebike. You just bought the frame and bolted on whatever components you wanted. No welder or special skills needed to build a high quality ebike. I could see tons of pluses for this. It'd be affordable for you and the user. You wouldn't have to spend half your budget developing and testing battery packs. You wouldn't have to worry about warranty issues. You wouldn't have to worry about legal issues since you are just selling frames and maybe drive train components.

Lots of companies are going this route. Selling a framework, and letting the community to the rest of the work. From quad-copters to arduinos. I dunnu, that's what I THINK would be the best use of your rather limited funds. I'm like you; my vision is unlimited but my skill set is actually pretty narrow. A fresh company building a bike from the ground up is going to take a ton of work and money. So you'll probably end up using off the shelf components. So why not just skip the headache of being the guy testing and dealing with all the random parts you need to get it running.

Just look at the attention max and hal got for their purpose built ebike frames! Probably every one here would and could drop a grand on a frame that just needed a easy to bolt on motor and battery pack. It'd make life soooo much easier. Probably easy enough for my lawyer brother in law who has been asking me how to build an ebike to do it.
Click to expand...

Hey Auroslip, that's exactly the sort of input I'm looking for. If people can really see where a company with this amount of finance can make some headway into developing some great products, then I'm all ears.

What you say does make sense. But I think that offering things other than the frame (such as the corresponding motor and controller) would also be feesable and fairly inexpensive to offer.

I'm certainly not wanting to go down the routes of developing our own hub motors/controllers/battery systems, but using existing products from other suppliers for much of these would be feasible.

However, one strength of this community is really getting to grips with the inconsistencies of these 3rd party products and providing engineering solutions to really get the most out of them.

Whether it's water-resistant coating in motors, or upgrading controllers for the most efficiency or power, there are people around who can provide a simple ways to massively improve these product.

In terms of manufacturing process, I'd like to try to tightly integrate the design process to the longer term goal of introducing new products. The goal would be to create products that are just an adaptation of other products. For example, create a hard tail frame as a second model that use the same design as its full suspension predecessor much as it can.

Or a lighter-use model that essentially just scales down the thickness of the frame and the depth of it,
but again, keeping the same overall shape in order to:

1. Begin to provide a recognisable design pattern throughout the range.
2. Cut down manufacturing costs by being able to reuse process', designs and components.
3. Allow a process of iterative improvements to the design of existing common components by engineering them into the next versions.
Click to expand...
 
By the way, having a background in marketing, it pains me to see that you have not once mentioned what your plans are and how much you expect to spend on marketing. The idea of, if you build it, they will come does not work. You will need a healthy marketing budget at the end of the day as well as a bunch of creating ideas on how to spend it.

I've seen a lot of ingenious products built by smart people fail because while they may be great at what they do, they are clueless when it comes to marketing their creations.
 
I too have pondered the idea of starting an ebike company in Northen CA. My background and degree is in Business Economics and I just dont see any profitability in a startup. Look at Ultra Motor as an example. They filed bankruptcy. They designed and built a sound ebike the A2B and it didnt sell as well as the hoped.

Best Buy also got out of the ebike business.

I think you need to consider a prototype ebike that you can sell for under 2k. I would wait a few years until gas is insanely expensive.
 
Why let the failure of others stop you if you have a great idea?

BestBuy got out of the ebike business for reasons that have little to do with the viability of it. It just was not a good fit for them. I cannot imagine why they got into it to begin with. They are an electronics retailer, not a bike shop.

As for A2B they created a great product but lost sight of what the market needs. They basically confused the hell out of the average consumer. Is A2B metro a bicycle? A moped? Scooter?

It's easy for us here to make sense of it, but not the the average joe. Too heavy to be a bicycle, to underpowered to be a motorcycle it ended up being a novelty item.

Jason27 said:
I too have pondered the idea of starting an ebike company in Northen CA. My background and degree is in Business Economics and I just dont see any profitability in a startup. Look at Ultra Motor as an example. They filed bankruptcy. They designed and built a sound ebike the A2B and it didnt sell as well as the hoped.

Best Buy also got out of the ebike business.

I think you need to consider a prototype ebike that you can sell for under 2k. I would wait a few years until gas is insanely expensive.
Click to expand...
 
eugenem said:
By the way, having a background in marketing, it pains me to see that you have not once mentioned what your plans are and how much you expect to spend on marketing. The idea of, if you build it, they will come does not work. You will need a healthy marketing budget at the end of the day as well as a bunch of creating ideas on how to spend it.

I've seen a lot of ingenious products built by smart people fail because while they may be great at what they do, they are clueless when it comes to marketing their creations.
Click to expand...

As I mentioned at the beginning of the thread, I'm not attempting to do this all myself, I'm looking for local talent to fill the required roles and make recommendations and decisions on these things. Marketing and Branding would be one of those areas.

But I do agree that it is dreadfully important.

To begin with, I'm going to concentrate on some of the free marketing I can already do. Maintaining a online social presence with an open insight into our progress will be one of the ways we do this.

One again, you seem to be missing the problem in this scenario. The problem is that it will take quite a bit of money, more that you have budgeted so far to get the project off the ground. Not to say that it cannot be done, but working with limited funds, I guarantee, you will see your idea change quite drastically as you discover how much things cost. Think of the overhead involved in designing and manufacturing something like this! Think of the cost of research involved! For example, in the first two pages of this thread we went from something completely custom designed to custom designing some components and using some mass produced ones. You are correct that in most cases sourcing good quality parts from China is tough, given the unrealizable nature of Chinese manufacturers.
Click to expand...

I think you're also missing the target I have. I'm not looking at us to be churning out hundreds of bikes a week. The goal isn't to compete directly with Chinese companies either. And the plan isn't to jump right into the mini/metro folding bike sector that's just a mountain to get entry into the market.

Instead, I believe we could offer something else that hammers its chinese competitors on quality.

There is no question for me, I want to build these in the USA and not china. If we sold enough products to out-strip supply, then I'd seriously look at starting a small manufacturing shop in Europe (most likely in my home land of the North of England).

I believe that in both these areas there are the talents to build consistently great quality products.

Now, regarding the finances.

You are right that $600,000 isn't a huge ton. But I think that's a pretty good start. When you look at the average budget for designing and building bikes, I think that this amount should give us enough capital to design and engineer two models.

With this budget we wouldn't be able to invest in huge production lines or machinery, but we wouldn't need to initially. I'd rather spend more investment in the product design, then scale the production as needed using revenue from sales.

I certainly don't believe that I have the capability to do all of this, but I know that there is this community and others to help contribute. And, there is a wealth of local knowledge in the santa cruz area. I'm determined to see this through through.

I'll see you all this summer!
 
eugenem said:
Why let the failure of others stop you if you have a great idea?

BestBuy got out of the ebike business for reasons that have little to do with the viability of it. It just was not a good fit for them. I cannot imagine why they got into it to begin with. They are an electronics retailer, not a bike shop.

As for A2B they created a great product but lost sight of what the market needs. They basically confused the hell out of the average consumer. Is A2B metro a bicycle? A moped? Scooter?

It's easy for us here to make sense of it, but not the the average joe. Too heavy to be a bicycle, to underpowered to be a motorcycle it ended up being a novelty item.
Click to expand...

I agree, it's sometimes easy to be disheartened by people blankly saying "you can't do it, there's not enough cash", but that's the the sort of open discussion I want to draw from. Instead suggestions like "If you only have budget x, why not try approaching it like this: ?" is exactly the sort of thinking we can use to make progress.

And the companies you mentioned here all have a very different business idea, that's one of large scale market saturation as quickly as possible. Ours is about engineering a product with the highest possible quality, then using that to drive development of more affordable, but still excellent quality products.
 
Good luck! I hope you do end up developing something great!

I am sure you will find a lot of great advice on this board! If there's any advise I can help you with, feel free to ask.

elliothaughin said:
eugenem said:
Why let the failure of others stop you if you have a great idea?

BestBuy got out of the ebike business for reasons that have little to do with the viability of it. It just was not a good fit for them. I cannot imagine why they got into it to begin with. They are an electronics retailer, not a bike shop.

As for A2B they created a great product but lost sight of what the market needs. They basically confused the hell out of the average consumer. Is A2B metro a bicycle? A moped? Scooter?

It's easy for us here to make sense of it, but not the the average joe. Too heavy to be a bicycle, to underpowered to be a motorcycle it ended up being a novelty item.
Click to expand...

I agree, it's sometimes easy to be disheartened by people blankly saying "you can't do it, there's not enough cash", but that's the the sort of open discussion I want to draw from. Instead suggestions like "If you only have budget x, why not try approaching it like this: ?" is exactly the sort of thinking we can use to make progress.

And the companies you mentioned here all have a very different business idea, that's one of large scale market saturation as quickly as possible. Ours is about engineering a product with the highest possible quality, then using that to drive development of more affordable, but still excellent quality products.
Click to expand...
 
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