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news
Pedal Me bike (Twitter: @pedalmeapp)Cargo bike delivery company Pedal Me goes into administration after failing to reach agreement with HMRC over debts
The electric cargo bike company Pedal Me has been forced to go into administration after it failed to reach an agreement with HMRC over its debts, but a buyout of assets from existing shareholders has managed to save jobs and offer some promise for the future, road.cc has learnt.
The news comes despite the London-based bike courier service company claiming that its gross margins improved to around 50 per cent, while hourly earnings per staff hour went up 20 per cent on the previous year.
Founded in 2017 by Ben Knowles, Rob Sargent, and Chris Dixon, Pedal Me established itself as a revolutionary and eco-friendly new service by using cargo bikes built in the Netherlands by Urban Arrow. The company claims that in central London, it is cheaper and quicker than the taxi service Uber.
> “Adrian, you’re wrong!” Pedal Me’s co-founder on cargo bikes + THAT foggy ride on the Isle of Man
The news was delivered by co-founder Ben Knowles via an email to its shareholders, seen by road.cc. Knowles cites the difficulties imposed on the company in a post-pandemic world, as the disruption caused by Covid meant that its work disappeared overnight. Since then, the company has also found it difficult to raise capital, hindering its growth.
He said: "Frustratingly — even though company productivity has never been higher than over the last few months — with earnings per staff hour running 20 per cent up on a year ago, and gross margins improving to around 50 per cent — the amount of debt we have means that we were unable to accept further investment in the current company without a workable payment plan for our debts with HMRC.
"Despite tireless efforts, we’ve been unable to reach a viable agreement with HMRC — which means there is no realistic chance of trading out of the current debt, even with those offers of investment and ongoing improvements in productivity.
"Having exhausted all alternative options, we have been forced to put the company into administration. At the same time, a group of existing shareholders bought the company assets back from administration as a going concern — preserving the jobs, the service and the mission."
> Pedal Me, the e-cargo bike-based delivery service, warns Amazon: “We’re coming for you”
Bike Taxi, the company underlying Pedal Me, meanwhile, has filed its accounts on Companies House today, which are expected to be made public in the coming days.
In a statement shared with road.cc, Knowles said: "Obviously this has been an incredibly difficult decision, but importantly, the shareholder buyout means we can continue without any interruption in service for our customers.
"The increased liquidity that comes with this process mean we can secure the future of Pedal Me, and move forward with our plans for improving service during busy times and the tech improvements we’ve got lined up. We set Pedal Me up with the intention of transforming cities and I am absolutely determined that we continue our mission to do so."
In the past few years, Pedal Me has gone through a number of crowdfunding investment rounds, the most recent one coming in October last year with offers of over £250k of investment in less than 6 weeks.
The company, which started out with just an earning of £454 in its first month six years ago and now has enjoyed up to £1.4 million per year revenues, had previously smashed its crowdfunding target of £150,000 in 2021 on the very first day of its call for investment.
And in 2020, just a few months into the lockdown but buoyed by its success in the past, Pedal Me warned online shopping giant Amazon, "We're coming for you."
The company had also become a talking point in 2022 by weighing on in the heated helmet debate, banning its riders from wearing them, saying that it believed riders and other road users tend to take more risks when a helmet is worn, and that the "vast majority" of injuries sustained by staff occurred off the bike.
Instead, it claimed that reporting near miss incidents, properly training riders, maintaining its fleet of cargo bikes, as well as tracking poor rider behaviour is more effective.
The news of Pedal Me folding means that the bike industry's topsy-turvy status-quo looks like it will be maintained going into 2024 as well, after a troubling 2023 which saw the likes of a number of UK-based cycling retailers enter administration, including the widely-popular WiggleCRC, along with distributors 2pure and FLi Distribution.
Just last month, there were reports of Orange Bikes going into administration as well, but the iconic British mountain bike brand has been saved from permanent closure, after it was announced that it was set to continue trading following the acquisition of its frame manufacturing partner Bairstows Sheet Metal.
Adwitiya joined road.cc in 2023 as a news writer after graduating with a masters in journalism from Cardiff University. His dissertation focused on active travel, which soon threw him into the deep end of covering everything related to the two-wheeled tool, and now cycling is as big a part of his life as guitars and football. He has previously covered local and national politics for Voice Wales, and also likes to writes about science, tech and the environment, if he can find the time. Living right next to the Taff trail in the Welsh capital, you can find him trying to tackle the brutal climbs in the valleys.
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52 comments
indeed, fuck the tories!
I don't think anyone plans to be in debt with HMRC, but being in debt because of mis-managed company finances and not being able to pay the tax bill, is a sign of company not worth investing in
Totally, but people appeared to do just that.
Never heard of PAYE ? Corporation tax? VAT ?
If the tax police are as efficient as the road police, could the directors simply say "sorry mate, didn't see the bills"? Or perhaps claim the contrast on the paper wasn't high enough and the sum was in their eyes? Or that someone else was operating the company at the time in question?
I suspect (for the smaller fish at least) the authorities are slightly more motivated to chase unpaid tax though.
No, educate me, the whole fucking lot, especially the bits I don't know and more importantly the bits a business owner didn't know when setting up a business.
This probably isn't the place to educate you on what you don't know, but in my experience, often the founders of a business that have the vision and/or the technical knowledge to produce a great product or service sometimes don't have the skills or knowledge to do the management bit, which is why it's important to get the best lawyers, accountants and IT infrastructure you can afford, plus later down the line, coaching based around capacity, growth and functionality.
I'm not going to speculate on what happened here with Pedal Me as I don't know anything other than what's reported. Other than to wish the staff & creditors all the best and hope that things can be resolved.
Still not educated. And you're right, probably not the best place to educate me. But it does seem to me that small businesses should remain small and if you want to grow you need to benefit those that already have wealth, and keep it there. Isn't there a fundamental problem here that a good business, assuming they had a business plan and could demonstrate where the customer base was and revenues were coming from, failed? When was the last time a good product, not a well marketed product, but a good product, sell well?
I think the quick & easy answer to those two questions is "social enterprise", two big examples being The Big Issue and (keeping it cycling) Green Commute Initiative. With this model, everyone is paid fairly, the profits are reinvested in the business and overheads can be much lower.
I got out of the IT company I was involved with for 20 years in 2019, probably on reflection burned out a few years before that. Admittedly I did "OK" from that financially, but now I work in a social enterprise (neither of the above mentioned). It's financially secure, and everyone is happy. Still uses the levers, efficiencies and opportunities available in a commercially based capitalist society but benefits many, many others apart from the shareholders.
I'd be suspicious of any capitalist business that is providing levers, efficiencies and opportunities that don't offer opportunities to shareholders. It defeats the objective of being a business. That's not to say that a good business plan doesn't result in a good business, it is to say that the failure of this business may be a result of a poor business plan.
I have to disagree with you on the shareholder comment. Yes, the standard business model is "directors have a fiduciary duty to maximise return to the shareholders" but the social enterprise model is not that at all. Maybe (respectfully) do some research on social enterprises - put aside the fact that the owner of my workplace is a revolutionary Marxist who makes Jeremy Corbyn look like Paddy Ashdown, he's also an exceptional businessman and visionary who has made it work. When I say "social enterprise" I don't mean the B Corp bollocks, there are businesses that do it properly.
I wouldn't confuse a stakeholder with a shareholder, social enterprise is awesome as long as it's a viable business, as we know, any society that relies on charity is a failed society (or however Hening Wehn phrased it). I'm pretty sure that Pedal Me isn't a social enterprise, so that's a different debate for a different day.
I'm not confusing stakeholders and shareholders, the owner I'm referring to is 100% "shareholder" of a £7m turnover social enterprise. The "stakeholders" are many who benefit.
Equally, don't confuse "charity" with "social enterprise" they are very different.
Agree, if Pedal Me wasn't a social enterprise previously I hope it comes back as one.
Hopefully it does and hopefully many more businesses become social enterprises and many more start ups follow the model, solid business with an identified need with a required profit.
Allow me to speculate for you - I dealt with Ben when he first used Crowdcube. He is a pure fantasist - no interest in facts or the truth or business. This biz was ALWAYS going to go bust it was just a Q of how many peeps he ripped off before it did. Seems rather a lot.
People they have lied to!
Most likely a vat liability plus social security. HRMC hate it when co uses vat due to pay other bills and pretty sure founder Ben can't count so would have been struggling.
COVID. It's in the article.
The thing where pretty much the entire population stopped buying things in shops, and switched to having them delivered to their doors by a range of courier businesses?
Is that the thing where people were told to cycle to work instead of driving in an enclosed space, because cycling was seen as safe?
There wasn't one just Bens fantasies
The lack of one and following money raising activities was a huge red flag being waved.
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