Why Swytch doesn’t need VC funding

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The era of the plague It has taught many of us that bicycles are a great way to get around cities. If you’re doubling up on e-bikes, charge them with batteries to help reduce the sweat required to get somewhere. Switch Technology, which builds e-bike accessories, isn’t targeting your average cyclist in the United States or Europe. Instead, the UK-based startup is offering regular cyclists a way to turn their existing bike into something a little smaller.

The Switch’s replacement kit is one of the lightest and smallest on the market, about the same size as a large smartphone and weighing only 1.5 pounds. It charges in an hour, offers 10 miles of range and “can be easily assembled on a bike by anyone who knows how to use an Allen wrench and has assembled IKEA furniture,” co-founder and CEO Oliver Montag told TechCrunch.

Oh, and if you pre-order, it’s only about $500.

Swytch launched an Indiegogo campaign in 2017, when Montague learned about the benefits of crowdfunding a new product launch.

Crowdfunding eventually gave way to crowdsourcing, which involves customers paying a deposit on a kit that will be delivered in the future. This, Montague says, helped the small company Swytch scale quickly without the need for significant VC funding by eliminating the need to hold too much inventory. Instead, Swytch uses the money from deposits to fund production.

To date, Switch has shipped more than 70,000 kits worldwide. There is a waiting list of over 1.5 million customers interested in the next release; Swytch had to close pre-orders recently, as Swytch will sell through May and is busy fulfilling more than 5,000 orders per month for customers. The next batch of stock will likely arrive in June, and pre-orders will reopen next month.

The company did not sit still. Swytch is moving into its next phase of growth, which may include new product offerings and partnerships. So we sat down with Montague to discuss the pitfalls of VC funding, why holding stock on hand is open to risk, and how Swytch can scale quickly without raising too much equity.

(Editor’s note: The following interview, part of an ongoing series with founders who are building transportation companies, has been edited for length and clarity.)

Switch has been able to scale rapidly without relying on much, or any, venture capital funding. They say it’s because of your “crowding” model. Can you explain how this differs from public funding?

Crowdfunding is when a lot of people come together and get big deals to support a new product in the future. Maybe. And that’s the big thing about crowdfunding: the big “maybe” in the end. Crowdfunding projects deliver nothing. Or they deliver something, but it doesn’t work. Or it works, but there is no customer service, and the company closes after a year.

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