Institutional investors double down on Rad Power Bikes with $154M Series D raise

Fat tire e-bike manufacturer Rad Power Bikes just raised another $154 million. The Series D raise from existing investors, which brings the company's total funding to $329 million, comes just eight months after Rad raised $150 million. The Seattle-based startup aims to use the funds to boost investments in product and technology innovation and beef out its distribution network, according to founder and CEO Mike Radenbaugh.

Rad’s latest round is led by institutional investors Fidelity Management & Research Company, with investments from funds and accounts advised by T. Rowe Price Associates, Inc., Counterpoint Global (Morgan Stanley), Vulcan Capital, Durable Capital Partners LP and The Rise Fund, TPG's multisector global impact investing strategy.

“I think the fact that some of the world’s most respected investors are doubling down just shows this competence in our business, both with the scale advantage that we have and also just the overall potential in the e-bike market,” Radenbaugh told TechCrunch.

It’s Rad’s scale that the company is leaning on now in order to really become a powerhouse. Rad Power has launched dozens of new bike accessories and multiple new e-bikes this year, despite the supply chain shortages that have caused delays on product releases across industries. That’s in part due to the company’s diversified and dedicated supply chain. Rad has multiple source suppliers and manufacturing partners across continents to fall back on and has even started chartering its own vessels to ensure bikes are delivered, Radenbaugh told TechCrunch in a previous interview.

Rad has also opened up multiple distribution centers this year, and by the end of the year, expects to triple its capacity to deliver bikes and accessories to customers within five days. The plan is to keep that momentum going into next year by adding more distribution centers in the U.S., Canada, the U.K. and Europe in order to strengthen its logistics and fulfillment capabilities.

“I think of our business more like a solutions business, so it’s also our buy online experience and pickup in store experience, our integrations with our retail stores and mobile service centers and making all that a seamless customer experience,” said Radenbaugh.

The company says it will triple the number of physical locations of mobile service and retail stores by the end of next year.

“Our business has been largely break-even or profitable, and it kind of fluctuates around break-even, so this is all growth capital,” said Radenbaugh. “It's all just designed to flow into expansion of our operations, customer service and innovation.”

For Radenbaugh, the guy who started building e-bikes at 15 years old, expanding Rad Power Bikes isn’t just about growing his business. It’s about making green transportation more accessible. It’s about getting people out of their cars and back outside.

“E-bikes are really the solution to a lot of our toughest challenges for the environment, and it’s the direct reason why customers are picking them up,” he said. “It could be teens and professionals commuting to school or work, running errands, retirees reliving the joy of riding again, commercial last-mile customers. These people are buying the product because it’s a better tool for everyday life and mobility, but there’s the environmental side, too, which gets our investor base really energized around the business.”

Rad Power Bikes has 350,000 customers, so it has plenty of data on how people use its vehicles. The company found that more than 70% of customers ride their bikes more than several times per week. In addition, Rad’s number one acquisition channel is word of mouth and repeat customers.

“The richness of our data is starting to show something bigger happening here, a kind of consumer-led movement by passionate, high-use customers,” said Radenbaugh.

These are heartening statistics because they signal a shift in modes of transportation that we’re starting to see mirrored in the way cities look at cycling infrastructure. Radenbaugh said the company initially built powerful utilitarian bikes with throttles, big batteries and fat tires in large part to overcome poor infrastructure. Now as the company tries to become a brand that is synonymous with the future of mobility, it’s doubling down on government affairs and lobbying for better accessibility.

“We believe that as an industry leader, Rad Power Bikes has a compelling market opportunity to fulfill the potential of e-bikes as an effective transportation and mobility solution globally,” said Andrew Davis, director of private investments at T. Rowe Price, in a statement. “In our view, they have the management team, technology strength and operational expertise to succeed over the long term and to play an important role in addressing the world’s current and future climate challenges.”