We’re thrilled to announce that we’ve taken a small investment from Bloomberg Beta.
Venture capitalists are in the business of investing capital into business ventures for a financial return. Since most startups fail, it’s usually not worth their time to put money into a company unless it has a chance of making a bazillion dollars.
We are…unlikely to be a bazillion dollar company. We’re making super-premium hackable ergonomic keyboards. Our business model is, for the foreseeable future, to sell physical products to customers in exchange for a healthy (but not ludicrous) profit.
Typically, venture capital firms don’t make their money back when you sell products to customers for a profit, they make their money when you get acquired or go public. One VC we were chatting with described a small business taking venture capital as “like putting rocket fuel in a hatchback. It won’t go well.”
Our growth curve isn’t going to look like the proverbial “hockey stick” that most investors expect. So, we were pretty sure we weren’t ever going to take money.
When we sat down with Roy Bahat at Bloomberg Beta, we’d come to him to ask for advice about running a Kickstarter campaign for an open product. (He’s the Chairman of Ouya, which did pretty well on Kickstarter.)
At the end of the meeting, he asked how he could get his hands on a keyboard and we joked that “investors are getting the first units.” Despite the fact that Beta’s investment thesis is “make things that improve the world of work”, it hadn’t occurred to us that we might be even a little bit interesting as a potential investment. Roy said he’d have to think about how that might work, since we weren’t really planning for the sort of exit a fund is usually looking for.
Within a couple weeks, we’d come to a rough agreement on terms. What we didn’t want was a situation where we would be pushed to make decisions that were bad for the company: to close-source things that would be better off open, to make cheap, mass-market products or to try to grow at a clip that was higher than the business could sustain.
Roy got it. At one point he commented that he’d love to make his money back in dividends.
The deal we came to was that Bloomberg Beta would invest $100k up front and another $150k when we launched our Kickstarter campaign. That’s both a ton of money for a company like us and nothing at all for a typical VC round–we have friends with early-stage hardware startups who burn more than $150k every month.
Beta’s investment has meant that we’ve been able to take the time to iterate on the Model 01’s design before we go to Kickstarter (rather than trying to do all of our engineering after we’ve already taken customers’ money.) It’s not enough to cover all the costs of making the Model 01. That’s where Kickstarter comes in. To be among the first to know when we launch our campaign, sign up for our mailing list.