We at Balderton are excited to be backing VanMoof on their mission towards getting the next billion on bikes. Even before these challenging times, electric bikes were on a rapid growth trajectory. As people and companies around the world begin to think about safe commuting options going forward, we believe that the quality and experience of riding VanMoof's bikes, their strong community-driven brand and their innovative go to market will help VanMoof become a household name from Tokyo to Berlin.
Taco and Ties, the Founders of VanMoof, have a higher calling: to build the world’s best commuting vehicle, on two wheels or four. With their newest electric bikes the S3 and X3, they are pretty close. To get here they have reinvented an entire industry. Most bike manufacturers rely on commoditized parts, component assembly, distributors and retailers. A VanMoof rides differently because it was built as one integrated product with complete control over their supply chain. This allows them to consistently infuse their bikes with industry first technology that creates a joyful riding experience. Their control over their customer facing front end also allows them to help tackle barriers to everyday riding, with unique services like Peace of Mind that keep your VanMoof in great shape and out of the hands of bike thieves.
Our journey with VanMoof began more than a year ago when we met Taco at the company’s Amsterdam HQ. Over lunch we fell in love with the passion, focus and ambition of the team. We stayed in close contact in the intervening months and in the past few weeks, that focus and ambition crystallised into a successful launch of their newest model. When he let us know that they wanted to accelerate their growth this year, we jumped at the opportunity to work together.
The company boldly launched the S3 and X3 at a time when around the world supply chains are falling apart and people are uncertain about their futures. Despite this uncertainty, the company has seen unprecedented demand. Bicycles are dependable and are becoming an ever more important part of our commutes. Cities like New York, London, Milan and Berlin are building better bicycling infrastructure at unprecedented rates in order to become safer, greener, and cleaner.
Our conviction was deepened by tremendous market growth in electric bicycles, particularly in Europe and the United States. For example in Germany, an important market for VanMoof, the overall electric bike market grew 39% yoy in terms of units in 2019, from 1M to 1.4M, outpacing analyst estimates. While VanMoof market share in Germany is growing quickly, it still represents only low single digits. There’s no ceiling in sight.
VanMoof is much more than a company. It has created a diverse tribe around its brand filled with a world of people who ride bikes but resist the “cyclist” stereotype. There are models who name drop the brand in Vogue articles even while its subreddit boasts more than one thousand members.
Customers love VanMoof because Taco, Ties, and the entire team’s commitment to quality produces a category-leading product that is changing the world for the better. Tim Bunting, myself and the entire team at Balderton are thankful to be on the ride.
Engineers have been writing software for IT infrastructure a lot longer than I have been alive, and at Balderton we led the Series A in MySQL when the sounds of dial-up modems were still pervasive. There is nothing new about load balancers, relational databases, or search algorithms.
What is new is how these fundamental components of infrastructure are now being built and bought. Not long ago, an open source approach to building infrastructure software was a philosophical choice. For the generation of infrastructure software builders starting out today, being open source has become a requirement.
It has become a requirement because open source projects have distinct advantages in infrastructure software versus their closed source counterparts, namely:
i. Greater implicit trust in the quality of the work
ii. Larger scope for collaboration across a worldwide developer community
iii. Development and iteration speed that isn't gated by hiring and onboarding
iv. Scale and adoption benefits due to wider distribution and awareness
v. Revenue benefits as software buyers from developers to CTOs begin to view open source as a hygiene factor on the label
How did we get here? In the days of MySQL, open source was often still considered a fringe, radical ideology that pitted greedy businessmen against idealistic creators. Today, venture capitalists are pouring money into open source at unprecedented rates, and founders with quickly accelerating Github star counts are just as likely to attract capital as those with rapid revenue growth.
This is partially due to a signalling effect. The successes of MySQL, Redhat, MongoDB, Elastic, Confluent, HashiCorp and Databricks, among many others, have shown that the interests of the businessmen and the dreamers are perhaps not irreconcilable.
We've been excited to be part of open source journeys from MySQL to Talend, and more recently backing the company behind Traefik, one of the strongest open source communities to ever emerge out of Europe.
There is a generational shift afoot. Gen Z and those that come after them will have been networked to one another their entire lives. They share media, play games, write words and cultivate friendships with contacts next door and around the world. They have grown up with a set of tools available to them that allows for proximity, convenience, and efficiency when it comes to collaboration and communication. When they build software that is globally relevant they will harness the power of those tools to build them with global approaches.
It is interesting that even as we shift towards wider and more diverse collaboration among builders, the platforms they are ultimately building on are collapsing into fewer and fewer ecosystems. Whether it's the paucity of options in cloud hosting providers, the emergence of a single dominant standard in container orchestration, or a handful of forward-thinking social media companies that dominate the development of open source frameworks, there is a degree of concentration that is troublesome, as is often the case in software these days.
Moreover, there are some fundamental issues of fairness around value capture and maintainer compensation that are as yet unsolved. The open source requirement will only harden as the benefits of trust, collaboration, speed, scale and revenue accelerate over time, and as open source becomes increasingly commercialized it will be important that commercial entities created by and using open source contributions think about how to do so fairly.
That said, the undeniable shift towards open source is inspiring. It enables and celebrates humans from one end of the world to the other who work together on designing, creating, and debugging the most complex machines of our time.
(If you're interested in discussing the future of open source in Europe and want to continue the conversation, come join us at O4B: The Open Source Business Forum @ o4b.org!)