German bicycle brand Canyon has raised €30mn in a funding round led by US basketball player LeBron James, valuing the group at €750mn as investors bet the global cycling boom will keep on rolling.
Canyon, which sells premium road, mountain and gravel bikes for as much as €8,000 directly to consumers via its website, has enjoyed average sales growth of 21 per cent over the past six years, reaching €475mn in 2021. Before depreciation and amortisation, the company generates an operating profit margin of 13 percent.
The company last year sold a 52 percent stake to investment group GBL for €350mn, valuing its equity at about €670mn, people familiar with the transaction told the Financial Times. It has now sold a 4 percent stake in a capital increase to LRMR Ventures — the joint family office of LeBron James and US business celebrity Maverick Carter — and US-based private equity firm SC Holdings.
“LeBron is one of the biggest athletes globally and he truly cares about cycling,” Canyon chief executive Nicolas de Ros Wallace told the Financial Times, adding that he was keen to leverage the star’s expertise in the US sports industry and retail market in a team – up he called “the perfect match”.
Canyon’s German founder Roman Arnold, who holds a stake of about 40 percent, said in a statement that the company had not actively scouted for additional investors but was swayed by the new partners’ “passion” for the brand and its ambitions.
Carter said that Canyon’s products, brand and direct-to-consumer model “creates a lot of compelling opportunities we want to be a part of”.
The bike brand’s fundraising shows that not all start-ups are afflicted by the plunging valuations seen in the tech sector. Swedish fintech company Klarna this month raised fresh capital at an 86 percent discount to its 2021 valuation.
De Ros Wallace told the FT that the company would spend the new funds mainly on its expansion in the US — a market where it aims to double its sales over the coming four years. With the US at present accounting for less than €100mn in annual revenue, “there is still a lot of opportunity,” he said.
While buoyed by cycling’s rising popularity since the start of the pandemic, the company, like its peers, has been hit by persistent supply chain issues, with drivetrain components, disc brakes and electronic components particularly difficult to source.
Canyon designs its bikes, with the frames and other components mainly produced in Asia.
The supply problems are “getting better, but in many, many products, we’re still sold out,” de Ros Wallace said, adding that most bikes were sold as soon as they were delivered from Asia.
“We’re not yet there at the situation that we would love to have,” he said. “We’re working with the key suppliers. . . but there is a lot of work still to do.”