Cake explored partnerships with Harley-Davidson and automakers prior to filing for bankruptcy

In 2023, Cake, the electric motorcycle company, engaged in discussions with Harley-Davidson and other automakers in a bid to survive, according to Stefan Ytterborn, the founder and CEO, in an interview on Tuesday.

The discussions, which have not been previously disclosed, ultimately did not work out for the Swedish startup, which unfortunately filed for bankruptcy last week. However, Ytterborn expressed optimism about navigating the bankruptcy process and ultimately securing a partner upon emerging from it.

“I’ve had 40 meetings in the past three days,” Ytterborn mentioned, noting that the majority of these meetings have been with various two-wheeler brands. He expressed curiosity about the possibility of collaborating in the future.

Cake secured an impressive $14 million in its Series A round in 2019, primarily through venture funding. The company’s ambitious objective is to manufacture stylish electric motorcycles and mopeds on a large scale. The startup, which has been on an impressive trajectory, received a sizeable $60 million Series B round in 2021 from the prestigious Swedish pension fund AMF. This significant investment provides the company with valuable institutional support. According to Ytterborn, his company initiated efforts to secure a Series C funding round in August 2022. He expressed confidence in being able to secure investments from a combination of institutions and a select few venture capitalists.

However, towards the end of that year, venture capitalists started to become more cautious, making it increasingly challenging to secure a Series C funding round. “Despite generating significant interest, no individuals came forward,” Ytterborn stated. The entire space crumbled into ruins.

Ytterborn revealed that Cake made a strategic move in late 2022 and early 2023, shifting its attention from European investors to those based in North America. According to him, all progress the company had made came to a halt in spring 2023 due to the Silicon Valley Bank crisis, causing concern among potential investors.

Cake enlisted the aid of Deutsche Bank and investment bank Numis (which Deutsche Bank later acquired) to approach various automakers, including Harley-Davidson. Ytterborn expressed his positive experience with the individuals he interacted with, noting their high level of receptiveness. Although he refrained from providing specific names, he mentioned that Cake had approached various parties, exploring possibilities such as investments and strategic partnerships.

Collaborating with a carmaker would have been the logical choice, especially considering the growing limitations in city centers throughout Europe, according to Ytterborn’s recollection. “If they fail to diversify their portfolio and introduce a tangible element into the cityscape, they will undoubtedly overlook the crucial last-mile aspect,” he remarked.

Cake faced challenges in finalizing a deal and had to shift its attention towards prolonging its financial resources. Ytterborn mentioned that they received significant support from the lead investor of the Series B round, the Swedish pension fund. Last week, the runway came to an end for Cake, as Ytterborn revealed the “horrifying reality” of having to file for bankruptcy.

The bankruptcy process in Sweden closely resembles the procedure in the United States. A trustee has been assigned the responsibility of ensuring that Cake’s creditors are adequately compensated.

However, Ytterborn emphasized that there is no need to attempt to dismantle the business. “Our goal, from a management perspective, is to seek out a partner who is willing to make a financial commitment to our company and management team. This will allow us to undergo a restructuring process and continue moving forward on our journey.”

Given the persistently high interest rates and the frequent closures of micromobility companies, accomplishing that goal could prove to be quite challenging. However, reflecting on the past, Ytterborn didn’t seem to have a favorable opinion of the fundraising landscape during Cake’s early days.

“In the future, when we reflect on the period from 2017 to 2022, we might find ourselves chuckling at how terribly it unfolded,” he remarked. “Currently, it seems that we are engaged in a relentless struggle to discover a path towards progress.”