What’s Up Wednesday 1/9/19

Global VC Market 2018 and Harley Davidson Goes Electric

It was a banner year for venture investment globally as venture capital investment reached record levels in 2018.  For volume, there were just over 34,000 deals for the calendar year.  That’s an increase of approximately 32 percent over the number of deals achieved in 2017.  These are the estimated numbers according to Crunchbase after all data for the year was tabulated as of Jan 1, 2019.

For United States venture investment, the numbers were equally impressive.  In terms of total dollars, venture investment reached $100 billion in 2018.  That’s obviously a huge number and 2019 should be another great year.

There’s never been a better time to be an entrepreneur.  Tech companies continue to be founded and funded at a staggering pace.

We plan to provide a more complete summation of the 2018 venture capital landscape in the coming weeks.  So please look back for that summary.

Harley Davidson’s Electrification Efforts

Harley has experienced corporate struggles in recent years (in fact, I stumbled onto an article just the other day that flat out predicted the iconic bike maker’s complete demise – along with those of the Campbell’s Soup and Budweiser beer brands).  Harley has seemingly had a difficult time adapting to changing consumer tastes and preferences.  A positive sign for the company is its recent R&D push into bikes that are drastically different than the ones it has traditionally offered.  The first to market offering as a result of that R&D investment is scheduled to hit show rooms in 2019.

This R&D emphasis is a push toward electrification of a certain segment of the Harley Davidson portfolio.  The first model to hit the market was recently unveiled and the bike will be called LiveWire.  Preorders are now being accepted with scheduled deliveries to begin sometime in the fall.

Harley lists the retail price for this first electric bike at $29,799.  It will supposedly have a 0-60 time of 3.5 seconds and have a range of 110 city miles on a single charge.  It’s going to be a cellular connected bike that employs a designated Harley smartphone app to provide the owner with real-time information about battery charging, maintenance reminders, and possibly tampering or theft.  It’s likely to be the most user-friendly and comprehensive offering that Harley has ever produced.

This is the first electric bike by Harley, but company plans are to have an entire electrified line-up by 2022.  More and more news about the company’s product strategy should become apparent over the next couple of years.

With the recent struggles that this company has faced, there is obviously a need for change.  Doing the same thing over and over and expecting a different result when product interest has obviously dissipated, is a poor strategy.  But this initial foray into electric motorbikes seems like a giant leap of faith.  The high price of the LiveWire bike, $29,799, seems like an awfully steep sum and it’s highly likely that a majority of consumers (who would otherwise love to own the bike) will find this price tag ominous.  Because of its cost, it’s difficult to envision how this initial electric bike gains marketplace traction (for the people I know who are into motorcycles, cost is a problem with Harley Davidson’s entire catalog of products; simply put, there are rival products out there that perform as well or better and cost the consumer far less).  With regard to the LiveWire’s other technical specs, there’s not much information yet available regarding the battery, its size, chemistry, charge times, etc.  Nevertheless, those specs are likely to fall within industry norms.  We don’t expect to hear about any great advances in technology at this point.

It’s hard to envision a scenario where the company can even sell enough units to generate useful customer feedback.  Short of that, the cost of getting the bike to market is unlikely to be justified.  It’s not going to add anything meaningful to topline revenue or bottom line profitability.  Based on news articles written about this latest Harley endeavor, that’s the general consensus and sentiment.  It comes across that Harley corporate is grasping at straws in an attempt to change company circumstances.

Going the electric route and committing to the R&D is definitely needed.  Electric motorcycles will certainly be a part of the future.  But bringing something to market that has limited consumer attractiveness is not the best of ideas.  Both established companies and entrepreneurs must do adequate market research in order to gauge consumer interest.  It’s easy to get things wrong because gauging consumer sentiment is difficult.  However, you must be realistic and what Harley is doing here is not realistic in our opinion.

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