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There are many ways to get around a city like Amsterdam, but biking is irresistible when you’re in the tulip city. While everything in the city happens on bikes which come in all shapes, sizes and colour, you’d notice many locals riding ‘bakfiets’ — Dutch for cargo bikes. Mostly the moms in the Netherlands use these cargo bikes to transport their kids and also sometimes groceries, electronics and even furniture. According to a recent study, this mode of transport has become unusually popular among highly educated, urban, two-income families.
It didn’t take much time for mobility startup Cargoroo to realise the potential of this market and the Amsterdam-based tech startup grabbed on this opportunity without wasting a minute.
So, how does it work?
Cargoroo offers e-cargo sharing bikes that are not only safe and affordable but also environmentally friendly and convenient. The electric cargo bikes are present at fixed locations, and one can rent them as per their needs, via an app.
What’s more? The startup proved its mettle by winning the silver European Startup Prize for Mobility this year. It was co-founded by Jaron Borensztajn, Erik de Winter and Jelle Maijer last year and debuted with a pilot project in Haarlem, the Netherlands. Currently, the company is looking into expanding its reach to both, national and international cities. In an exclusive interview with the Cargoroo team, we found out more about the startup, what challenges it faces, what it plans to do next.
On a lookout for investors
Back in January this year, Cargoroo received over €700,000 under the EU subsidy project to introduce 150 of its electric bikes in seven pilot cities in Europe. Additionally, there have been smaller private investments by the founders in the past, and the company is now open for a Series A funding rounds.
The company’s co-founder tells us that “the subsidy will be used for launching pilot projects in several cities like Amsterdam, Nijmegen in The Netherlands, Manchester in the UK, Leuven in Belgium and finally Dreux and Kempten in France and Germany respectively. Since the subsidy would recover 60 percent of the cost of the pilot program, the company needs to pay for the cost itself. ”
What’s the startup story?
Along with identifying a market gap in urban mobility, the idea of Cargoroo was conceived by the Dutch founders, when Jaron Borensztajn, a father of three used to ride them in cargo bikes some three years ago when the kids were younger. While, co-founder, Jelle Maijer owned a restaurant business in Amsterdam and also an electric cargo bike.
The co-founders had a revelation about how the cargo bikes were more practical. Mulling over the possible opportunity and its economic viability, they dived headfirst into the mobility startup scene with Cargoroo, which they believe is not only a business opportunity but also an excellent way to bring about some pragmatic changes in a city.
Cargoroo’s rocky beginnings
With the plans of launching a pilot in Amsterdam, the co-founders held talks with the government of Amsterdam and The Netherlands. However, their plans were stalled and they’re still waiting for the government’s new policy for shared bikes. The need for a policy arose when China’s Ofo bikes flooded the city with their shared bikes, which bothered the locals since the city’s bike lanes are narrow. So they went to Haarlem city where the startup was welcomed, but with the condition that there should be a need for shared cargo bikes.
After receiving extremely positive feedback, they piloted in Harleem North, which was more than a year ago. The pilot was a success with plenty of positive feedback that fueled the company’s plans for growth. After this, Cargoroo got in talks with multiple Dutch and international cities, and also started an international initiative with several other parties. Soon after, they began with the European project.
While there are no Cargoroo bikes yet in Amsterdam, the founders said, “the startup is currently involved in a project with the city to launch a pilot with e-mobility hubs and this is set to start by the end of 2019 after getting the nod from the city council.”
Cargoroo’s story in the Netherlands
De Winter also notes that “Cargoroo’s launch in Haarlem has been a great success with 80 percent of cargo trips replacing car trips, which is the main goal of the company.” Additionally, the retention rate is said to be around 94 percent for Cargoroo cargo bike users. “While, Cargoroo is currently active in one Haarlem, it has plans to expand in other cities in the Netherlands, but only after additional funding,” says co-founder Jaron Borensztajn.
Current business model
As one might have got the idea that Cargoroo is going big with its shared e-cargo bikes. The company rents its bikes by hourly or per day basis, and that’s the primary source of their revenue.
As for the company’s target audience, Cargoroo aims to target families with kids, people going for shopping and also small time businesses including restaurants and shops. “While not aiming to become their main mode of logistics, the startup’s services are used by them for short durations.”
The Cargoroo founders had an interesting answer for this! They say, their biggest competitors are the cars as they want people to change their habit of using a car and shift to more sustainable alternatives like their shared cargo bikes.
European startup award for mobility 2019
Small startup, big plans is what Cargoroo’s silver at the European startup award for mobility signifies. Right now, the company wants to expand to at least one more city in Holland, but it’s yet to be finalised which city it will be. The startup is involved in a project with the city of Amsterdam, which is an EU funded project.
Under this project, the city will realise e-mobility hubs that will feature different forms of electric transportation, and Cargoroo cargo bikes are one of them. However, the cargo bikes will be present in relatively smaller numbers as there will be 50 shared cargo bikes for 15 e-mobility hubs. De Winter explains that these Mobility hubs will be the city’s responsibility while the company will take care of the e-cargo bikes.
Will Cargoroo expand to other countries too?
When asked about whether the company will be expanding its services to other countries, De Winter says that it is undoubtedly on the agenda. Which means that the organisation will surely mark an entry into markets of different countries and since the EU Project handles small scale projects, the company’s main goal is to gain experience in other markets where EU projects are deployed. “The company is currently looking at expanding its services in the Netherlands and Belgium and is also in talks with different municipalities in Paris and Berlin.”
Operational challenges faced by the startup
The first and foremost operational challenge for Cargoroo, like every startup, is to grow. This entails getting the right permissions from a city and explain to them what they are doing. Another challenge that the company faces is to ensure that their shared bikes never run out of juice and for that they have people that perform battery swaps during the night, which raises the operational cost.
Jaron Borensztajn also notes that “the company will launch a bike by the end of this summer, which will come equipped with a massive battery pack. The new bike is said to deliver an impressive action radius of over 100km. Additionally, a connected device within every bike will notify the company when there’s insufficient battery power so that users always get a bike with sufficient battery power.”
Why every European city can benefit from Cargoroo bikes?
Discussions are currently underway in Holland about the disadvantages of having cargo bikes on the cycle path, in Holland, says Borensztajn. The co-founder says, “it’s a fair discussion since bike paths are generally narrow and busy.” However, he also points out the fact that electric cargo bikes are slower than mopeds as they attain a maximum speed of 25 (mph or km/h). Also, a mother with kids riding a shared cargo bike don’t drive at the speed of 25; they go even slower.
There’s also the fact that if Cargoroo doesn’t offer its shared e-cargo bikes, people will buy it themselves. Therefore, the company is reducing the number of cargo bikes by enabling users to rent and share them instead of buying them. Renting a cargo bike that is convenient and safe might not seem like a big deal, but it is definitely having a positive impact on our planet.
Stay tuned to Silicon Canals for more updates in the tech startup world.