COMMENT: Money matters and people do too – if you want ROI

OPINION: Much has been made of the investment merry-go-round in the cycling industry. For at least the last two decades, cash from outside the trade has been put into (what they hoped would be) up-and-coming brands. The lockdown boom and the days of Team Sky and London 2012 spring to mind as two particular periods that really seemed to spark the interest of investors.

The trade has been dubious about some of the big money being splashed by those outside the trade with, perhaps, unrealistic appreciation of trading in the cycling industry. Certainly we’ve seen some go sour pretty quickly. You can’t quite say that WiggleCRC’s purchase in 2021 by Signa Sports United was by a cycle industry novice, but this big money deal of course had dire consequences for WiggleCRC which just two years later was looking for a new owner (Frasers Group snapped it up earlier this year).

A twist in the investment cycle has seen a couple of big name brands being bought back by their founders, with some instances of this in recent times. A few months previous, Kona was purchased by its founding duo. After admitting it has had “a bumpy couple of years”, Dan Gerhard and Jake Heilbron have bought the firm back and are promising more retailer focus as well as a D2C “pause”.

Troy Lee founder, er Troy Lee, recently bought back the brand he founded 43 years ago, with backing from a “world-class American family” – indicating that the really important thing is the people in the business (and at the helm), even if cash is coming from those that don’t necessarily “understand” the industry.

Two years ago, Nikwax founder Nick Brown passed control and ownership of that brand to a newly formed employee trust. At the time, Brown said: “By passing on the
business to the employees, I feel that I am not only looking after them, but also looking after the interests of our loyal customers. Outdoor people have come to have high expectations of Nikwax, at many levels, and I would not want them to be disappointed. So many companies end up being aggressively taken over and broken up and lose their soul. This is our best shot at avoiding that and continuing the guiding principles.”

Sage words from Mr Brown there. Money matters, but, it seems, people matter more – especially if you want a return on your investment and a viable future for a brand.

This article originally appeared in Cycling Industry News magazine, issue #3 2024. Read the whole thing in our archive or subscribe online. Want to have your say? Let us know here.