Unicorn, an e-scooter startup from the co-founder of Tile, a gadget tracker, shuts down without money for refunds. The company claims that they lost all their money by blowing it on Google and Facebook Ads. While the ads were a success, the orders they received were as less as 350. Now, the company cannot afford to deliver any of its scooters and also cannot refund the customers, and the reason given by the company is that they are completely out of funding.
The CEO Nick Evans said in the email send to the customers that, the company has totally failed as a business and has also spread the cost of failure to the early customers that believed in them.
Unicorn emerged six months ago as an e scooter company with an aim to supply affordable scooters. With an all-white look and high tech bells and whistles, they also have GPS tracking and smartphone-enabled locking. The scooter also uses Bluetooth to track lost items, which is a feature developed from Tile, Evan’s other company.
Anyway, Unicon is no more, and the company claims that it lost all its money in advertising and loan repayments. Evan had sent a mail to the costumers, which can be summarised as: We could have taken more orders and continue production so that the costumers receive what they booked. But if we continue doing so, a lot of money would be lost in manufacturing and fail to meet the delivery orders from future customers, thus losing more money.
Lots of money was lost in Facebook ads and also in the form of the down payment for the manufacturer, which is non-refundable. There was competition from other companies, which led Unicorn to invest more in ads. But this did not improve the sales and led the company to lose all the money.
The customers are very annoyed about the whole matter an says that Unicorn has basically robbed the customers by not delivering the scooters even after receiving the payments. Another customer added that this was not expected from Nick Evans, given his huge reputation and called Evans a Thief.
Other than Unicorn, a start-up called Inboard Technology, which was initially selling skateboards and later pivoted to electric scooters, also failed to succeed in this. But certain e- scooter companies like Unagi succeeded by traditional advertising methods like celebrity endorsements and helped to raise $3.5 million in venture capital.
The e-scooter has been a loss for many startups. Companies like Bird and Lime were able to stay in the market because of their large capitals from investors. But the business has a seasonal nature which has made it difficult for the small startups to cope up. Unicorn had partnered with the Chinese company Segway/Ninebot for manufacturing, and they found themselves facing large upfront costs that are difficult to recoupe without large customer pre-orders.
This can also be taken as an example of the loss of money and difficulty faced by companies for just selling the Chinese scooters in US markets by painting them and adding fancy add ons.