An Irish e-bike firm, which had raised €8.7m from investors, has had provisional liquidators appointed by the High Court after the company was forced into a full recall of all of its bikes on safety grounds last month, just as it planned ambitious expansion.
While the company had made great strides under the young Irish entrepreneur who started it, an issue with the battery in its e-bikes meant they had fallen out and, in some cases, resulted in personal injury claims.
Stickybottle first covered the story of Jack O'Sullivan and Modmo two years ago when the first 800 of his bikes were offered for sale - at €2,000 each - and sold out very quickly. O'Sullivan was just 17-years-old when he founded the company and his story generated a lot of positive headlines.
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It emerged at the start of this year the firm - with bases in Dublin and Vietnam - had secured €5 million in investment from Irish property developer Sean Mulryan to expand its business. But the design problems that resulted in the batteries dropping out from the bikes' frames then resulted in a recall, which derailed Modmo's plans to restructure and grow.
At the end of last week the High Court in Dublin appointed provisional liquidators. The company had secured a total of €8.7 million in funding, including €2.7 million last September and €1 million in March from a group of investors.
At the start of this year, when the Mulryan investment became public, Modmo had 35 engineers working for it in Vietnam and planned to grow that to 100 through this year as it eyed expansion into the US and Canadian markets.
It also had a base in Dublin, which was focused on sales, marketing and support, That group was 10-strong at the start of 2022 but Modmo planned to expand quickly to a headcount of about 30 in Dublin. Modmo's bikes sold across Europe but were proving especially popular in the German market, which accounted for about 85 per cent of its sales.
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However, a defect with a locking mechanism that kept the batteries in place resulted in that mechanism opening on some bikes, while they were in use. As a result, batteries could fall out and a small number of personal injuries claims had been lodged by people who said they had crashed as a result.
Just last month the company decided it must recall all of its stock on safety grounds. While a plan was just up and running to address some of the quality and safety concerns, the recall was a devastating blow for Modmo.
While management accounts for the firm, Modmo Technologies Ltd, showed a loss of €4.1 million in the nine months to the end of September, it was solvent on a balance sheet basis. A €2 million book value was placed on its stock, before the product defects are factored in, and the recall was expected to cost just over €750,000.
Ms Justice Siobhan Stack approved the appointment of provisional liquidators in the High Court in Dublin last Friday and adjourned the case to a future date.
O’Sullivan, who is from Cabinteely in Dublin, is a former downhill rider who said he was addicted to the sport by the time he entered his teenage years and so had to come up with an income to pay for his hobby.
“I began importing and selling refurbished iPhones and grew that revenue to around €20,000 per month,” he has previously said. “After a year or two of that, I learned that it wasn’t scalable as barriers to entry were too low.” While he drifted out of school he continued to study on his own and sat the Leaving Cert, securing enough points to study business at UCD but dropped out after four months.
He then began selling fixie bikes for €250 after securing a supplier and some investment money from his father and brother, going on to quickly produce and sell 165 bikes. After that experience he said he wanted to design a bike that could take the place of a car for many people. So he came up with Modmo ebikes, with a range of accessories that can be fitted to the front and back of his bikes.
