Electric motorcycle company Cake held talks with Harley-Davidson and other automakers in 2023 as it fights to stay afloat, founder and CEO Stefan Ytterborn said in an interview with TechCrunch on Tuesday.
The talks, which have not been previously reported, ultimately fell through for the Swedish startup, which filed for bankruptcy last week. However, Ytterborn said he hopes to find a way to get through the bankruptcy process and emerge with a partner on the other side.
“I’ve had 40 meetings in the last three days,” Ytterborn said, adding that most were with two-wheeler brands. “They’re interested in knowing if there’s a chance we could do something together,” he said.
Cake raised $14 million in Series A round in 2019, consisting mostly of venture funding, with the goal of building high-design electric motorcycles and mopeds at scale. It followed 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 looking to raise its Series C starting in August 2022 and that he expected it could close with a similar mix of foundations and some VCs.
But by the end of that year, VCs were pulling back a lot, and closing a Series C suddenly seemed a lot harder. “We had a lot of interest, but no one stepped forward,” Ytterborn said. “The whole place 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 progress the company made ended in the spring of 2023 with the Silicon Valley Bank crisis, which spooked anyone who was interested, he said.
Cake hired Deutsche Bank and investment bank Numis (which was later acquired by Deutsche Bank) and began dabbling in auto companies, 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 is looking at a number of options, including investments and strategic partnerships.
Partnering with an automaker might have made the most sense, especially given the growing constraints in city centers across Europe, Ytterborn recalled. “They know very well that if they don’t expand their portfolio, [and bring] to something that would actually be naturally present in the urban landscape, they’re going to lose that last-mile reality,” he said.
Cake couldn’t close a deal and instead had to focus on “extending the runway,” Ytterborn said, which included being “spoon-fed” by its Series B round’s lead investor, Sweden’s pension fund. That runway sold out last week, when Ytterborn said Cake came to the “scary reality” of having to file for bankruptcy.
The bankruptcy process in Sweden is similar to how it works in the United States. an administrator has been appointed to ensure that Cake’s creditors are as complete as possible.
But, Ytterborn said, “there’s no reason to try to destroy” the business. “Our intention from a management point of view is to find a partner who is willing to invest [the] company and management, to restructure and continue the journey forward.”
With interest rates still high and micromobility companies going out of business seemingly every month, this could be a difficult task. But while it may have been easier to raise money early in Cake’s life, Ytterborn didn’t sound particularly fond of that environment in hindsight.
“I think 10 years from now, we’ll be looking back on the years between 2017 and 2022 with a bit of a laugh, looking at how horrible it was,” he said. “Right now, I think we’re fighting our asses to find a way to move forward.”
