The electric cargo bike company Pedal Me has been forced to go into administration after it failed to reach an agreement with HMRC over its debts, but a buyout of assets from existing shareholders has managed to save jobs and offer some promise for the future, road.cc has learnt.
The news comes despite the London-based bike courier service company claiming that its gross margins improved to around 50 per cent, while hourly earnings per staff hour went up 20 per cent on the previous year.
Founded in 2017 by Ben Knowles, Rob Sargent, and Chris Dixon, Pedal Me established itself as a revolutionary and eco-friendly new service by using cargo bikes built in the Netherlands by Urban Arrow. The company claims that in central London, it is cheaper and quicker than the taxi service Uber.
> “Adrian, you’re wrong!” Pedal Me’s co-founder on cargo bikes + THAT foggy ride on the Isle of Man
The news was delivered by co-founder Ben Knowles via an email to its shareholders, seen by road.cc. Knowles cites the difficulties imposed on the company in a post-pandemic world, as the disruption caused by Covid meant that its work disappeared overnight. Since then, the company has also found it difficult to raise capital, hindering its growth.
He said: “Frustratingly — even though company productivity has never been higher than over the last few months — with earnings per staff hour running 20 per cent up on a year ago, and gross margins improving to around 50 per cent — the amount of debt we have means that we were unable to accept further investment in the current company without a workable payment plan for our debts with HMRC.
“Despite tireless efforts, we’ve been unable to reach a viable agreement with HMRC — which means there is no realistic chance of trading out of the current debt, even with those offers of investment and ongoing improvements in productivity.
“Having exhausted all alternative options, we have been forced to put the company into administration. At the same time, a group of existing shareholders bought the company assets back from administration as a going concern — preserving the jobs, the service and the mission.”
> Pedal Me, the e-cargo bike-based delivery service, warns Amazon: “We’re coming for you”
Bike Taxi, the company underlying Pedal Me, meanwhile, has filed its accounts on Companies House today, which are expected to be made public in the coming days.
In a statement shared with road.cc, Knowles said: “Obviously this has been an incredibly difficult decision, but importantly, the shareholder buyout means we can continue without any interruption in service for our customers.
“The increased liquidity that comes with this process mean we can secure the future of Pedal Me, and move forward with our plans for improving service during busy times and the tech improvements we’ve got lined up. We set Pedal Me up with the intention of transforming cities and I am absolutely determined that we continue our mission to do so.”
In the past few years, Pedal Me has gone through a number of crowdfunding investment rounds, the most recent one coming in October last year with offers of over £250k of investment in less than 6 weeks.
The company, which started out with just an earning of £454 in its first month six years ago and now has enjoyed up to £1.4 million per year revenues, had previously smashed its crowdfunding target of £150,000 in 2021 on the very first day of its call for investment.
And in 2020, just a few months into the lockdown but buoyed by its success in the past, Pedal Me warned online shopping giant Amazon, “We’re coming for you.”
The company had also become a talking point in 2022 by weighing on in the heated helmet debate, banning its riders from wearing them, saying that it believed riders and other road users tend to take more risks when a helmet is worn, and that the “vast majority” of injuries sustained by staff occurred off the bike.
Instead, it claimed that reporting near miss incidents, properly training riders, maintaining its fleet of cargo bikes, as well as tracking poor rider behaviour is more effective.
The news of Pedal Me folding means that the bike industry’s topsy-turvy status-quo looks like it will be maintained going into 2024 as well, after a troubling 2023 which saw the likes of a number of UK-based cycling retailers enter administration, including the widely-popular WiggleCRC, along with distributors 2pure and FLi Distribution.
Just last month, there were reports of Orange Bikes going into administration as well, but the iconic British mountain bike brand has been saved from permanent closure, after it was announced that it was set to continue trading following the acquisition of its frame manufacturing partner Bairstows Sheet Metal.
52 thoughts on “Cargo bike delivery company Pedal Me goes into administration after failing to reach agreement with HMRC over debts”
I wonder what went wrong with
I wonder what went wrong with the business plan…
….and why dis the owe the
….and why did they owe the tax man money? That would appear to suggest poor management’s to blame. Rule 1: never loose money; Rule 2: always pay the tax man; Rule 3: never forget rules 1&2.
Chronic management.
Chronic management.
No need to wonder, it’s
No need to wonder, it’s reported in the article. Substantial debts to HMRC, and unable to reach an agreement for repayment. That level of debt made it difficult to raise further investment, despite improving margins.
Who the fuck invests in a
.
Who the fuck invests in a
Who the fuck invests in a company that plans to create a debt with HMRC?
don simon fbpe wrote:
Creating debts or a liability with HMRC is part of doing business, it’s paying it on time that is the crucial thing. The latter is clearly what went wrong, which is what you appeared to be wondering.
I’m wondering how an unviable
I’m wondering how an unviable company ever got off the ground.
Because some business exploit
Because some business exploit buzz words and slogans like “Going Green” and “Green Agenda” , “Great for the environment” or “Zero Emissions” to curry favor with the government or other big businesses which they wish to get in bed with. All of a sudden they get a huge cash injection of a few million to invest into the business.
I mean as a business alone. It wasnt a terrible idea to use cycling infrastructure for small deliveries when roads these days are quite heavily congested. There is merit behind the whole idea.
Perhaps someone should put a
Perhaps someone should put a business plan together to see if it’s viable.
It wasn’t unviable. But like
It wasn’t unviable. But like many business it got hit hard by the pandemic and had to take on a lot of debt. Then the interest rates on that debt went through the roof and the cost of servicing became too much to bear.
indeed, fuck the tories!
indeed, fuck the tories!
I don’t think anyone plans to
I don’t think anyone plans to be in debt with HMRC, but being in debt because of mis-managed company finances and not being able to pay the tax bill, is a sign of company not worth investing in
Totally, but people appeared
Totally, but people appeared to do just that.
Never heard of PAYE ?
Never heard of PAYE ? Corporation tax? VAT ?
If the tax police are as
If the tax police are as efficient as the road police, could the directors simply say “sorry mate, didn’t see the bills”? Or perhaps claim the contrast on the paper wasn’t high enough and the sum was in their eyes? Or that someone else was operating the company at the time in question?
I suspect (for the smaller fish at least) the authorities are slightly more motivated to chase unpaid tax though.
No, educate me, the wole
No, educate me, the whole fucking lot, especially the bits I don’t know and more importantly the bits a business owner didn’t know when setting up a business.
don simon fbpe wrote:
This probably isn’t the place to educate you on what you don’t know, but in my experience, often the founders of a business that have the vision and/or the technical knowledge to produce a great product or service sometimes don’t have the skills or knowledge to do the management bit, which is why it’s important to get the best lawyers, accountants and IT infrastructure you can afford, plus later down the line, coaching based around capacity, growth and functionality.
I’m not going to speculate on what happened here with Pedal Me as I don’t know anything other than what’s reported. Other than to wish the staff & creditors all the best and hope that things can be resolved.
mark1a wrote:
Still not educated. And you’re right, probably not the best place to educate me. But it does seem to me that small businesses should remain small and if you want to grow you need to benefit those that already have wealth, and keep it there. Isn’t there a fundamental problem here that a good business, assuming they had a business plan and could demonstrate where the customer base was and revenues were coming from, failed? When was the last time a good product, not a well marketed product, but a good product, sell well?
don simon fbpe wrote:
I think the quick & easy answer to those two questions is “social enterprise”, two big examples being The Big Issue and (keeping it cycling) Green Commute Initiative. With this model, everyone is paid fairly, the profits are reinvested in the business and overheads can be much lower.
I got out of the IT company I was involved with for 20 years in 2019, probably on reflection burned out a few years before that. Admittedly I did “OK” from that financially, but now I work in a social enterprise (neither of the above mentioned). It’s financially secure, and everyone is happy. Still uses the levers, efficiencies and opportunities available in a commercially based capitalist society but benefits many, many others apart from the shareholders.
I’d be suspicious of any
I’d be suspicious of any capitalist business that is providing levers, efficiencies and opportunities that don’t offer opportunities to shareholders. It defeats the objective of being a business. That’s not to say that a good business plan doesn’t result in a good business, it is to say that the failure of this business may be a result of a poor business plan.
don simon fbpe wrote:
I have to disagree with you on the shareholder comment. Yes, the standard business model is “directors have a fiduciary duty to maximise return to the shareholders” but the social enterprise model is not that at all. Maybe (respectfully) do some research on social enterprises – put aside the fact that the owner of my workplace is a revolutionary Marxist who makes Jeremy Corbyn look like Paddy Ashdown, he’s also an exceptional businessman and visionary who has made it work. When I say “social enterprise” I don’t mean the B Corp bollocks, there are businesses that do it properly.
mark1a wrote:
I wouldn’t confuse a stakeholder with a shareholder, social enterprise is awesome as long as it’s a viable business, as we know, any society that relies on charity is a failed society (or however Hening Wehn phrased it). I’m pretty sure that Pedal Me isn’t a social enterprise, so that’s a different debate for a different day.
don simon fbpe wrote:
I’m not confusing stakeholders and shareholders, the owner I’m referring to is 100% “shareholder” of a £7m turnover social enterprise. The “stakeholders” are many who benefit.
Equally, don’t confuse “charity” with “social enterprise” they are very different.
Agree, if Pedal Me wasn’t a social enterprise previously I hope it comes back as one.
Hopefully it does and
Hopefully it does and hopefully many more businesses become social enterprises and many more start ups follow the model, solid business with an identified need with a required profit.
Allow me to speculate for you
Allow me to speculate for you – I dealt with Ben when he first used Crowdcube. He is a pure fantasist – no interest in facts or the truth or business. This biz was ALWAYS going to go bust it was just a Q of how many peeps he ripped off before it did. Seems rather a lot.
don simon fbpe wrote:
People they have lied to!
Most likely a vat liability
Most likely a vat liability plus social security. HRMC hate it when co uses vat due to pay other bills and pretty sure founder Ben can’t count so would have been struggling.
COVID. It’s in the article.
COVID. It’s in the article.
KiwiMike wrote:
The thing where pretty much the entire population stopped buying things in shops, and switched to having them delivered to their doors by a range of courier businesses?
Is that the thing where
Is that the thing where people were told to cycle to work instead of driving in an enclosed space, because cycling was seen as safe?
There wasn’t one just Bens
There wasn’t one just Bens fantasies
The lack of one and following
The lack of one and following money raising activities was a huge red flag being waved.
So being simple is this
So being simple is this ‘pedal me reborn’ and the debt stays with a defunct company so the HMRC debt isn’t repaid to any real extent and the crowdfunders lose the lot?
That’s basically it, yeah
That’s basically it, yeah
No. Depending on what was
No. Depending on what was paid for these assets and whether there were other secured lenders on the failed Co, HMRC will get the cash – which is why they have chosen thos route. im no fan of HMRC but Ben and Friends are pure fantasists and HMRc would have seen this from their various promises – which they alwasy failed to keep. Rubbish biz and this new version wont last long.
Just to balance all the
Just to balance all the criticisms of the business model – HMRC i.e the public/you, have allowed a business to go into administration and not repay its debts, that then is immediately bought out by existing shareholders, which clears all debts and carry on as if nothing happened with the same business model staff and assets…..
The only loosers here are you and me as tax payers.
HMRC follow instructions of
HMRC follow instructions of the government, not the will of the people. That would need PR, not FPTP. So putting responsibilty on to the public as a whole is somewhat disingenuous.
Given the size of the cuts
Given the size of the cuts the government made to the active travel budget last year, I’d say they can afford to take the hit of PedalMe’s unpaid tax bill.
Perhaps it’s a bit like a reverse stealth tax, leaving debts in lieu of active travel funding?!
Global Nomad wrote:
Allowing a business to go into administration does not mean that it doesn’t have to repay its debts, it just gives some protection from legal action whilst the administrator decides on the best course of action. In this case the assets of the business have been bought from the administrator, who will use any derived income from the sale to pay off the tax owing, or a portion of it. It’s difficult to say whether that’s a good deal without seeing the amount of debt owed and the amount raised from the sale of assets, but although it’s clearly not a desirable situation for any of the parties it may be the only way the taxpayer can receive any of the monies owing.
Not necessarily. HMRC are
Not necessarily. HMRC are preferred creditors, so they will likely get at least some of what they’re owed. We’ll find out more in due course when the liquidator’s report is posted on Companies House.
Thats not how an admin works.
Thats not how an admin works.
Global Nomad wrote:
this business cannot manage it’s debts, the administrators step in to sell their assets (presumably to the highest bidder) the funds generated from that sale pay the existing creditors (HMRC first, shareholders last)
What difference to HMRC does it make if the assets are bought by tyhe previous owners or someone else?
But I have to wonder
1) where did the existing management get the funds to buy the assets
2) why do they think they can make a profit now, but not before?
Having invested twice with
Having invested twice with ‘bike taxi ltd’, the underlying owners of pedal me, it leaves a pretty sour taste in my mouth that a select group of shareholders can buy the business back on the cheap and just start again. Having also used the business a number of times I won’t ve going back to using pedal me II. But thems the ‘brakes’ ?
That said, this is the second example of a crowdfunded company ‘suddenly’ having to pay a whopping tax bill which I’m guessing is a combo of extremely poor tax planning and/or HMRC becoming much more draconian after covid.
The second business also miraculously is starting again by buying the assets of tge failed company….
So HMRC destroyed investor
So HMRC destroyed investor value by refusing a debt repayment scheme from an obviously profitable business hit by the black swan that was COVID. If I was an investor I’d be F’ING furious at HMRC, not the PedalMe management.
Next time HMRC/govt bail out a bank, contract services business, steel mill or other ‘too big to fail’ major firm to the tune of £Bn’s remember that’s *our* money they’ll bung to their mates, but not to the rest of us.
This isn’t on management, this is on Tory MP’s.
Utter rubbish. Pedlame has
Utter rubbish. Pedlame has never amde a penny of profit and has to date lost almost £3m. They owed HMRC in Feb23 so a year ago almost £500k in unpaid employment tax. Staggering mismanganemtn for which Ben and his fellow idiots should be struck off. Thats out money he is wasting.
Those accounts are not pretty
Those accounts are not pretty reading – funding the cashflow by building up creditors and bank loans.
Ben and friends didnt have a
Ben and friends didnt have a clue – this was not a profitable biz – huge losses every year – £2.9m culm to FEB23. Only reason funded on Crowdcube was because investors were solfd a story to by the company about future growth and profits – a pure fantasy. These guys couldnt manage a cabbage. We told Ben and investors that they didnt know what they on about and again we have been proved right. Start ups need real entrepreneurs to make them work not fantasists. Nothing to do with Covid. Just really poor management. Where has all the cash gone Ben?
Interesting…
Interesting…
I worked with Ben for about 4
I worked with Ben for about 4 years (not with PedalMe) and just as he started up his business. He had drive and determination. But, my word, was he chaotic and unorganised. He really couldn’t organise ‘a piss up in a brewery’.
Quote:
I had thought that phoenixing a business like that was frowned upon. Putting the company into administration because it can’t pay its debts while at the same time selling off everything that might have been used to paid those debts?
brooksby wrote:
The money paid to the administrators for the assets will be used to pay off the debts, seems as though the company has been given plenty of time to prove that they could use those assets to create funds to repay their debts and has failed to do so.