How the owners of Kona Bikes bought their business back from an American firm

Each spring, the mountain bike industry’s movers and shakers kick off the season on California’s bucolic Monterey Peninsula at the Sea Otter Classic, one of the world’s largest cycling festivals. Over four days, 90,000 athletes, spectators and “bike people”—like Kona Bikes founder Jake Heilbron—celebrate shred culture and participate in races, group rides and equipment demos.

In April 2024, Kona Bikes, renowned for its role in the creation of “freeride” style mountain biking on Vancouver’s North Shore and purveyor of hard-core cyclo-cross/gravel bikes, folded its tent just as the annual festivities were about to begin. Kent Outdoors, the U.S. parent company that bought Kona two years earlier from Heilbron and his partners, announced that Kona was bankrupt.

The torrent of rumours and speculation that surrounded the brand shortly thereafter culminated in the best news possible: in their “love letter to the bike industry,” founding owners Heilbron and Dan Gerhard had bought back  the company.

For decades, Kona’s owners basked in its storied reputation as the “smallest biggest bike company in the world.” While big-budget brands like Trek, Specialized, Cannondale and Giant produced highly innovative mountain bikes for World Cup and Olympic calibre athletes, Konas found favour with a rowdier, more punk-rock kind of rider who was far more excited by magazine cover stories and segments in high-profile mountain bike action movies.

The Kona Clump freeride team featured John Cowan and Paul Basagoitia, whose starring segments in videos like New World Disorder and the Kranked series turned an entire generation not just to trail riding in the wilderness but also to innovative concepts such as the Whistler Bike Park, where Kona was the official rental bike for over a decade. Team rider Dave Watson put the sport of dirt jumping on the map when he shocked the crowd at the Tour de France by jumping over the road bike racers in a crazy kind of anarchy that came to define the sport and the Kona brand. Spanish rider Andreu Lacondeguy took home first place at the 2009 Crankworx festival in Whistler. Kona even partnered with Ford Motor Company when they launched the Ford Focus in North America. By the time COVID hit in 2020, Kona was a mature company producing solid, high-value, blue-collar mountain and gravel bikes.

“At the outset of the pandemic, we didn’t even know if we could stay open or not; we literally wondered how we’d sell our bikes,” says Heilbron. Kona’s fortunes reversed as the bike industry rallied to promote cycling as the perfect activity to counteract COVID. Most brands were left scrambling to meet unprecedented demand, using forecasting data and anecdotal evidence to place orders as quickly as possible. “It was definitely a bubble,” Heilbron admits. “We didn’t have time to develop new products; we were simply giving stores whatever was selling. We knew that it would end, but we just didn’t know when.”

In 2021, Heilbron, Gerhard and a third partner sold Kona to then-called Kent Water Sports for an undisclosed sum rumoured to be as high as $75 million. Kent already owned a suite of watersports brands and the pandemic offered the perfect opportunity to expand into another recreation sector.

“People were horny for bikes at the time, and private capital was no exception,” says Heilbron. “We believed the partnership would work and we had a great relationship with their new CEO, Ken Meidell, an avid cyclist who immediately understood the quirkiness of our brand.”

Meidell, however, did not last long, and things went sideways quickly. Kent took possession of thousands of new bikes just as the pandemic was ending and made a major decision to abandon its dealers and adopt a direct-to-consumer business model. Desperate to generate cash flow to finance its acquisition, Kent/Kona dropped a bomb—it would offer a “buy one, get one free” (BOGO) deal on all its existing inventory. To the consumer, it was a bonanza, but to many long-time Kona aficionados, it reeked of desperation.

In hindsight, it’s hard to say whether COVID was good for the bike industry or not. Certainly, shops sold out of stock in 2020 and 2021 and did big business servicing steeds bought on Craigslist, Facebook Marketplace or hauled out of the basement.

Ken Maude is the founder/owner of Lynn Valley Bikes, located close to the famous North Shore trails. “During the pandemic, we were so short on bikes that we were taking $200 deposits on new orders. By the time the bikes arrived, COVID restrictions had been removed, and people were spending their money on other things. We have a lot of existing inventory to clear out before we start taking new orders,” he says.

Which raises the question: Can Kona come back from the dead? Vancouver-based retail consultant Rick Bohonis of DIG360 thinks so: “There are many cases in retail where founding partners sell out to private equity and then buy the company back for next to nothing. The founders simply can’t stay away—it’s their legacy.”

Bohonis, who co-founded the highly successful Urban Barn chain, is also a keen mountain biker. “If you look at the categories that Kona is strongest in—mid- to premium-end mountain bikes as well as the high-growth gravel bike niche—you’d have to think that Kona’s future is as secure as any in the cycling marketplace,” he says. “Staying focused will be the key.”

Since taking the company back in May of last year, Heilbron and his team—including many former employees who’d been laid off by Kent some time ago—have been patiently rebuilding the brand, re-establishing all-important relationships with former dealers (many of whom felt burned by the infamous BOGO deal) and getting fresh inventory like the highly regarded Ouroboros gravel bike back into stores.

“We relaunched our two e-mountain bikes in August, and our pro rider Cory Wallace won his sixth straight World Endurance Mountain Bike Organization title in October,” says Heilbron. “We’re back on track and creating major buzz in the bike world.”