Electric motorcycle company Cake 2023 is in talks with Harley-Davidson and other automakers as it battles to stay alive, founder and CEO Stefan Ytterborn told TechCrunch in an interview Tuesday.
The talks, which were not previously reported, ultimately did not pan out for the Swedish startup, which filed for 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 last three days,” Ytterborn says, most with bike brands. They were “interested in seeing if there was an opportunity for us to do something” together, he said.
Cake raised $14 million in its Series A round in 2019, aiming to build high-design electric motorcycles and mopeds at scale. It has given the startup some institutional backing with a $60 million Series B round in 2021 led by Swedish pension fund AMF. Ytterborn said his company has started trying to raise a Series C by August 2022 and that he hopes to close with a combination of similar firms and some VCs.
But by the end of that year, VCs had largely pulled back, and closing a Series C suddenly seemed more difficult. “We had a lot of interest, but no one came forward,” Yetterborn said. “The whole place collapsed.”
According to Ytterborn, Keck is shifting its focus away from European investors and toward those in North America in late 2022 and early 2023. He said any progress the company made ended with the Silicon Valley bank crisis in the spring of 2023, scaring off anyone interested.
Keck began pitching automakers including Deutsche Bank and investment bank Numis (which Deutsche Bank later bought) and Harley-Davidson. Ytterborn said he's found most of them to be “super receptive,” and while he wouldn't detail who pitched the cake, he said the company is looking at a number of options, including investments and strategic partnerships.
Teaming up with a carmaker might make a lot of sense, especially given the growing constraints in Europe's city centers, Yetterborn recalls. “They know very well that if they don't expand their portfolio, (and bring) something that's actually physically in the urban landscape, they're going to lose that last mile reality,” he said. .
Keck was unable to bring a deal to fruition and instead had to focus on “extending the runway”, which included a “spoon feed” by the Swedish pension fund, the lead investor of the Series B round. That runway ran out last week, when Ytterborn said the cake hit the “horrible reality” of having to file for bankruptcy.
The bankruptcy process in Sweden is similar to how it works in the United States; A trustee is appointed to ensure that the cake creditors are as whole as possible.
But, Ytterborn said, there is “no reason to try and destroy” the business. “Our intent from a management perspective is to find a partner willing to invest in the company and management as we continue to rebuild and continue the journey.”
With interest rates still high and micromobility companies going out of business every month, this is a tall order. Although it was easy to raise money early in the cake's life, Ytterborn wasn't particularly fond of that environment.
“10 years from now, we'll look back on the years between 2017 and 2022 with a bit of a smile, and see how terrible it has become,” he said. “Right now, I think we're fighting our asses trying to find a way forward.”