Yesterday we were all surprised to learn that Etergo has been acquired by the Indian company Ola Electric. At the time, all we had was a vague press release from Ola Electric that only stated it had acquired Etergo and the two companies looked forward to working together. However, since that left us with more questions than answers, we got in touch with our friends at Etergo and CEO Bart Jacobsz Rosier was kind enough to give us an interview, so here is what we learned. (My questions in bold, his answers underneath them.)
What can you tell me about the acquisition itself?
We were already looking for investors in summer last year, we were still running a crowdfunding campaign at the time and in parallel we were talking to large investors all around the world in order to ensure the continuity of the company, because you need a lot of capital to build an electric two-wheeler and also to build up the manufacturing capacity to make them.
We already had many funding rounds and we really needed a big partner. Etergo had already found multiple companies that were interested to invest in Etergo. However, after COVID-19 hit, the only serious contender left to secure the continuity of the company was Ola Electric.
So what does this mean for Etergo’s future?
Ola’s vision is very much aligned with what we wanted to do. The good thing is that we always wanted to roll out our products both to Europe and Asia.
Does this mean that you will be expediting your plan for a cheaper scooter for the Asian market?
That is very likely, yes.
In an interview with CNBC, a board member of Ola Electric, BVR Subbu, stated that he hopes to present a version for the Indian market within the next 12 months.
Will the scooter still be sold to consumers or will it become part of a scooter network?
We are not 100% sure yet. We are going to align our strategic plans with Ola in the next couple of weeks. We literally just closed the deal. We are going to align our teams, our projects, our go to market strategy, and we will communicate more about that as soon as we are able to.
Ola Electric was also already working on its own electric 2 wheeler. Will you guys be combining products? Will Ola scrap theirs? What will be happening with that?
There will be a combination of technologies. They have built a very good swappable battery and they are already performing some pilot tests with swappable batteries that Ola is currently rolling out all across India.
On social media there are a lot of people very worried about this acquisition. Let’s start with the consumers. People in Europe who have ordered a scooter, will they be receiving their product? Will they be receiving the servicing plans and over-the-air updates they were promised?
So, we really want to, but at this moment we can’t be 100% sure on that yet. We will be finalizing our plans on that and will provide as much clarity as possible in the following weeks, once we finalize our market strategy in the post-covid world. We understand that this needs to be resolved and clarified ASAP, but yeah, for now the people in our team just found out yesterday that they still have a job.
I understand. That is absolutely the most important thing, and that the main goal of transitioning the world to electric scooters is still intact.
In the interview with CNBC mentioned previously, Ola Electric board member BVR Subbu also stated that he hopes to see Etergo delivering to the European market in volumes by the end of this year, so consumers most likely will get their orders.
We kind of skipped over this, but for how much was Etergo sold?
I am not allowed to disclose the exact purchasing price, but it was at a significant loss and we felt that we needed to give away all of our entitlement from the purchasing price to all the investors, including all the crowdfunders.
Because of this a lot of people suffered a big loss. That was obviously not our intention. This is not what we envisioned when we started, but to be honest, Ola is a really good partner to still be able to chase the dream and at least get some kind of return for the investors. This was really the only way for investors to get any money back at all. It was in everyone’s best interest to do this. It’s not like we had another option or something.
So, now that you have been acquired by Ola, is Etergo going to be a separate division or is it going to be a complete fusion of teams? Do you have any insight on that?
So, they want us to keep our Amsterdam office and they want to keep our own DNA, but obviously in the backend we are looking to synergize things together as much as possible. With regards to brand, I think that is also part of the strategy — we are looking at how we can leverage the different things that we have. But the Ola brand is already very famous already, so I think that can definitely help.
So, when will you know more about what will happen?
We hope to know more in the following weeks and [will] share this externally as soon as we can.
This does answer a lot of questions about what was going on and why. The fact that Ola Electric wants to keep Etergo’s “DNA” intact as much as possible is a good sign for people in the European market. Here is something that a lot of the consumers and new investors don’t seem to understand: investing money is always a risk. When you invest in a company on the stock market, when you pre-order a product or support a crowdfunding campaign to get the product the company intends to sell, it is always a risk that you need to be prepared for. Even SpaceX and Tesla nearly went bankrupt in their first years of operation. If starting a company was easy, everyone would do it.
As someone who has invested in over 15 companies on the stock market and backed over 35 crowdfunding campaigns, I know there are risks and there always needs to be an effort to understand and evaluate that risk on an ongoing basis. From the crowdfunding campaigns I have backed over the last few years, six products never arrived. Out of these six, one gave me a full refund, 2 of the 6 were most likely a scam, the other 3 still claim to one day make and ship the product out of the profits they make from selling the product to other clients first. Out of all these crowdfunding projects, only 3 were delivered on time, some were years late but still delivered, and all of this is absolutely normal. That the company continues to communicate with the backers and investors matters a great deal.
A month ago, Etergo already shared with investors that it was in a really difficult financial situation due to the coronavirus, so investors should not be surprised nor believe that they have been scammed or conned (as multiple people on social media have claimed). On the stock market, many companies tanked due to the coronavirus and many businesses are going bankrupt even with all of the relief packages governments around the world are introducing. Hertz went bankrupt. Startups are in the most difficult position of all. For them, this is much worse than a protracted recession in which people spend less.
Anyone who has ever made a full business plan for a hardware startup will know of the staggering costs, the detrimental consequences of failure, and the need for expediency when it comes to bringing the product to market. It takes brave people to move forward with something like that.
The most important thing is Etergo can keep the dream alive, fight the good fight, and bring the “Tesla of scooters” to the masses in one form or another. In the end, it’s all about a better future as well as preventing and fighting the effects of climate change.
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