From idea to successful business model
In just three years, the pioneering project carvelo2go has established itself as Switzerland's largest player in the area of electric cargo bikes. In addition to a network of 70 locations, the start-up also has a solid partner base for further funding. How have they managed it?
Nowadays, if you ask Jonas Schmid how things are going with carvelo2go, you'll be looking at a happy man indeed. "The project has a solid foundation," says the project manager of mobile club Touring Club Schweiz. Since the start-up's launch in 2017, a total of 300 electric cargo bikes can be hired in 70 locations across Switzerland.
The bikes are parked at businesses or restaurants, where the batteries and keys to the bikes are handed over to users. In return, these companies can use the cargo bikes themselves free of charge for 25 hours a month. These "hosts" are locally established businesses such as bakeries, shops, cafes or restaurants. Users pay an hourly rate online and then pick the cargo bike up from the host, dropping it back off when they're finished. The company has recorded 50,000 uses by around 17,000 registered users to date – a trend that is rapidly on the rise.
"We could never have imagined that we would be able to establish ourselves in cities across Switzerland so quickly," says Schmid. Moreover, he is also pleased at how well received the cargo bikes have been in smaller communities, too. Schmid believes the company owes its success in part to modern-day attitudes. "Transport planners and politicians are very focused on finding ways to use public spaces sustainably and efficiently," he says. Cargo bikes could play a key role in helping them to reduce the number of cars on the road in cities. "Our own studies have shown that, in 40% of uses, our cargo bikes are used to replace journeys that would otherwise have been made by car," says Schmid, pointing out that this is an unusually high percentage in the sharing landscape.
"After obtaining our start-up funding, we managed to get a lot of partners on board,"
Schmid puts carvelo2go's rapid growth down not only to the public's increasing environmental concerns, but also to the company's funding model. "After receiving start-up funding from Engagement Migros, we gained many investors by developing partnership models with promising value propositions for cities and sponsors." Contributions from participating cities have been deliberately kept low to ensure the company does not have to depend on complex government tenders or concession processes.
So how did the company manage to secure its various sources of funding so early on? "The subsidy from Engagement Migros was essential, especially at the beginning of the project, but we didn't stop there and decided to build up a network to avoid financial cluster risks."
The project also received solid support from TCS, which started in the form of sponsoring contributions and, since 2020, has been supplemented with additional investments. "To have such a large organisation at your side is a stroke of luck for any start-up," says Schmid. Although, even with this support, the project wasn't an immediate sure-fire success. In particular, searching for new hosts for the cargo bikes is still tough, says Schmid. "We follow a classical acquisition approach, first by looking on Google Maps for possible locations, then writing to these places by email and then giving them a call." Nevertheless, these efforts pay off. "By establishing contact personally, we've not only found hosts, but also local ambassadors of our project on the ground," says Schmid. "Thanks to them, the word is being spread about carvelo2go in these different locations, and we're not having to do any additional marketing there."
However, dealing with the company's rapid growth hasn't been completely straightforward. "We had to allocate sufficient human resources really quickly," says Schmid. Luckily, this all went smoothly. "We were forced to streamline our work processes as much as possible to make them manageable. This sharpened our focus and we learned what our core business was – and what it wasn't."
"They have succeeded in keeping the balance between ambition and feasibility."
The company was also driven forward time and again by Engagement Migros. "Much input and, in particular, ambitious objectives pushed us to succeed," says Schmid. In particular, the intensive coaching provided by Engagement Migros in cooperation with its pool of consultants from the Pionierlab helped the start-up from the outset to sharpen its focus when developing the project idea and systematically continue along this path. "As part of the advice we received, our business model was examined with a critical eye time and again. This allowed us to strategically analyse the situation together," says Schmid. Ultimately, this also bolstered the Pionierlab to systematically continue along its own path. "In our experience, we would recommend that any start-up tests its business model in a real-life situation as soon as possible, making any necessary adjustments," says Schmid, as this worked very well for them.
Robin Born, who looks after the project at the development fund, is also happy with how things are going: "The project managers have succeeded in keeping the balance between ambition and feasibility, which is why the project has achieved so much in such a short space of time." He also believes that carvelo2go's success is down to its ability to get things done without ever losing sight of the big picture.
Schmid is convinced that they will still be spurred on by this ambition even after the partnership has come to an end – they'll have to, he believes. While carvelo2go has got off to a good start and is now financially stable, there are certainly still some challenges ahead.
"We see potential in partnerships with major players in the transport sector," says Schmid. Projects with the objective of connecting carvelo2go to comprehensive mobility platforms are already in motion. Soon there may even be a single subscription package providing access to a number of services, including cargo bike hike at a flat-rate tariff. "Switzerland is a pioneering country in the area of car-sharing," says Schmid. "It could also join cities like Copenhagen, where cargo bikes are part and parcel of the city landscape, to become a pioneer in this area, too."