Interesting bit of news today from sidewalk delivery robot startup Kiwibot: The company announced it has signed a $10 million financing deal in the form of a sale and leaseback arrangement with Kineo Finance, an asset financing company based in Switzerland.
According to company founder Felipe Chavez, the deal is structured such that Kineo will make up to $10 million available in financing to Kiwibot, and in return, Fineo will buy the robots built by Kiwi at cost and lease them back to the company. This arrangement enables Kiwi to have ready access to growth capital to build its robots and also limits the equity dilution of a typical growth-round investment.
“It is a straightforward sale and leaseback,” Chavez told Tech Funding News. “Once we manufacture them and ship the robots to their final destination, we sell them to Kineo at cost.”
While this is the first time that I’ve seen this type of capital agreement in the food robotics space, it could be a sign of things to come. As we’ve seen from this month’s news from Picnic, the food tech hardware market is having challenges as more traditional venture investor appetites for large growth rounds have shrunk in the current uncertain economic environment. By using a sales and leaseback deal, startups can get access to a whole new type of financing and also limit how much of their company they need to give up in the process.
Of course, there are also downsides to these types of arrangements. Kiwi has to make sure they can find customers for their leased robots, as they’ll now have a monthly payment to service for the robots in the field. Kineo owns the robots and if Kiwibot can’t make the payments, the financing company can do whatever they want with them. Add in other complicating factors like the loss of tax benefits such as asset depreciation, and the conversation about whether to adopt this new model becomes somewhat nuanced.
That said, I applaud Kiwi for finding a new and creative way to fund their expansion, and I have to think other food robotics vendors might be taking a look at this type of financing arrangement.
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