Electronic scooter startup, Unicorn, has ceased trading after running out of money. It leaves customers who placed 350 orders for Unicorn’s $699 scooters thousands of dollars out of pocket.
The highly-saturated e-scooter industry witnessed a casualty last week as Unicorn announced it would be shutting down operations.
Nick Evans, Unicorn’s founder and CEO, made the announcement to customers who had placed orders for some 350 Unicorn scooters.
Evans said that Unicorn had “totally failed as a business,” and that the company had “made the very, very difficult decision to stop.”
Evans is co-founder of Tile, whose tracking tags have proven highly popular. As an established name within the tech industry, it seems many customers had faith that Evans would deliver what he promised.
Why did Unicorn run out of money?
Making it as a tech start up is tough, especially when you’re competing against numerous other companies selling a very similar product.
Unfortunately, it seems this was the fate which met Unicorn. According to The Verge, Unicorn appeared just six months ago, a late arrival to a market which was already saturated by bigger e-scooter companies like Bird and Lime.
But, despite having to compete against some well-established names, Unicorn’s product was impressive on paper.
With features like GPS tracking, a field Evans has a proven track record in, Unicorn’s scooters seemed like an attractive alternative to scooter sharing.
In fact, the Unicorn scooters were convincing enough that 350 orders were placed. At $699 per scooter, Unicorn would have secured more than $200,000 in cash from customers.
But it seems this wasn’t enough to cover Unicorn’s expenses. In particular, one aspect of the business appears to have taken the vast majority of Unicorn’s cash.
“A large portion of the revenue went toward paying for Facebook ads to bring traffic to the site,” Evans said. “Unfortunately, the cost of the ads were just too expensive to build a sustainable business.”
Customers left out of pocket
The bad news for Unicorn customers is that not only will they not be getting their brand new Unicorn scooters, they also won’t be getting any of their money back.
“A portion also went to our manufacturer in the form of a down payment to build the scooters, but unfortunately that down payment cannot be redeemed for a portion of the scooters that we were planning to order,” Evans explained in his email.
At $699 each, customers who placed an order for a Unicorn scooter will now be down a significant amount of money whilst getting absolutely nothing in return.
The Verge has received comments from a number of disappointed Unicorn customers. One called Nick Evans “a thief”, whilst another explained that her daughter will now not be getting what was supposed to be her Christmas present.
Evans says that the company is in the process of selling off its remaining assets, which may mean customers can receive partial refunds. He did, however, reiterate that refunds would be unlikely.
The tale of Unicorn is another reminder of the risks involved in paying up-front for a product from a start up without a product ready to deliver.