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Daily news and analysis about the food tech revolution

crowdfunding

Crowdfunded Home Beer Maker iGulu Appears to Be a Goner

If you love beer and are contemplating backing a crowdfunded home brew machine — don’t. This free advice is brought to you by more than a year of covering Kickstarted beer campaigns, most of which have taken the public’s money, only to shut down before shipping any product.

Following in the steps of Brewbot and HOPii, it now looks like iGulu is the latest automated home brewing appliance to fold. The following update was posted to Indiegogo and Kickstarter on April 4:

Dear Backers,

We regret to announce that we have to put our project in ‘hibernation’ and pause our regular update. For the past few weeks we have experienced some of the hardest challenges for our company and the project. Our funds were exhausted and we experienced a significant team downsizing due to the financial constraints.

While I still maintain great working relationships with all of our key team members, I couldn’t keep them as employees before I secure new funds from the investor. We have been talking with several prospects since last year, but the financial markets are unfavorable to start-ups like ours recently so I haven’t had any luck yet.

I’m still trying but I cannot at present give any specific timeline for recovery of this project. I will share any further updates whenever we have tangible progress that we are able to report. I deeply apologize again. We have shipped the first machine to one Australian backer. We will continue to fix existing bugs, optimize our product, ship 2nd, 3rd and more machines. Please believe us. We won’t give up.

Regards,

iGulu Team

This development isn’t actually that surprising for anyone who backed or followed the project. iGulu met its funding goal in May of 2016, and after a litany of production and manufacturing delays, the CEO publicly apologized to backers in December of 2017 and said the company had secured an undisclosed amount of funding from three Chinese VC firms to supplement the $1.1 million it had raised via crowdfunding. At that time, the company was expecting to ship its product in July 2018.

This projected ship date obviously came and went with no (well, one?) iGulus brewing up frosty mugs of beer for the backers who ponied up at least $489 a pop to get one. And though the latest update seems to offer those who funded the project a ray of hope, history shows its unlikely that all of the 1,000+ backers will ever get their iGulus.

We’ve reached out to iGulu for comment and will update if we hear back.

At this point, we sound like a broken record, but there’s a HUGE caveat emptor when backing hardware projects from untested companies on crowdfunding platforms. Designing a one-off prototype is relatively easy. Manufacturing that same device at scale in China brings up a host of unforeseen and expensive issues (see: Rite Press, Cinder).

Some home beer brewers have come out of crowdfunding unscathed — Picobrew and BrewArt, for example. I am also optimistic about BEERMKR because that was built by an existing company that had previous experience with beer-related hardware.

It doesn’t look, however, like iGulu has got what it takes to succeed. Appliance giant LG is getting into the home brew appliance business; maybe it can do what Desora did with Cinder and buy up iGulu’s assets for cheap.

Oh, and if that lone Australian who received their device is reading, please drop us a line to let us know how it works.

Rite’s Wrongs, Crowdfunded No-Mess French Press Is a No Show For Many Backers

Looks like you can add the Rite No-Mess French Press to the long list of crowdfunded hardware projects that have a hard time making it to market. Upset backers that haven’t received their product almost a year after the promised delivery date, have been venting their frustrations here at The Spoon and on Kickstarter:

Backers have been sharing information and screengrabs with us from Rite’s backer-only updates posted to Kickstarter, and here’s what’s happening:

What happened to the money?
Backers got riled up in earnest last week, when on February 4, of this year when Rite’s CEO, Sargam Patel, posted a video on Kickstarter saying that there have been manufacturing challenges (a factory quitting, filter issues) and they need more money (we watched a screencapture of the video). Patel says he sank most of his life savings ($280,000) into the project and has not paid himself. He then goes on to ask backers for $30 a pop to pay the factory as well as the shipping and duties.

In the video, Patel also says that the company raised over $1 million in pledges, which is technically true if you look at the Kickstarter page, where it says “21,771 backers pledged $1,086,974 to help bring this project to life.” But sifting through the multiple Indiegogo campaigns the company ran, it looks like Rite pulled in $220,400. Plus it won $25,000 in “flash funding” from Ingram Micro, bringing the total to $1,332,374. It’s not a huge gulf between what he says they crowdfunded versus the apparent reality, but it’s good to get the full picture.

In the video, Patel says he’s spent the money “responsibly,” and blames pricing the product too low ($25 – $50 depending on the model and when you pledged) and offering free shipping in the U.S. for the company’s woes.

Additionally, the company experienced manufacturing issues, which is pretty common for crowdfunded hardware projects.

In an update on February 7, Patel shared the financials in a backer-only update via Kickstarter, which were sent to The Spoon:


What’s missing from these numbers is the $220,000 raised on Indiegogo. Granted the number Rite would actually have collected was less as Indiegogo charges 5 percent commission, and Stripe charges 3 percent + .30 per transaction, but money earned should be included. Patel may not have included it as this was a message to Kickstarter backers, but the omission is relevant when you’re going back and asking people for more money.

Patel said that 7,000 people have received their presses so far. That means at least 14,771 backers still don’t have theirs (and that number doesn’t include any Indiegogo backers).

One other point, in the video Patel says that asking for the $30 from existing backers was a “non-starter” for the Kickstarter legal team so he is going out directly via email. Kickstarter confirmed via email to The Spoon that it determined asking backers for more money “was not an appropriate use of our platform.”

Why did Rite only allow for two months for delivering its product?
The Rite Kickstarter campaign happened in January 2018, and featured a number of variations on the product: a half-liter version, full liter, different colors, etc.. The estimated delivery date for most of these was March 2018. That’s just two months after the campaign reached it’s initial goal.

The Kickstarter campaign, which launched in January 2018, says that the first off tool samples of the french press happened in September 2017, and in November 2017, product testing had occurred. If this happened as listed, then perhaps the company felt that in all honesty, they could flip the switch, have the products produced, shipped and delivered in that short window.

But that obviously didn’t work out. In his February 7 update, Patel explains what happened:

The first factory built tools in 2017 for both the 1 liter and ½ liter. The factor started production on the ½ liter because they felt it was easier to produce than the 1 liter. The parts they were making had repeated problems that should have been an easy solve. At the same time the factory was not chasing 1 liter production schedule effectively. I feel the factory felt producing products to our quality standard was not going to be profitable for them so they told us they would not be producing product going forward. At this point we asked for our money back for the material deposits and tooling. They responded by saying they had already spent over hundred thousand dollars on development would not return the tools or deposits back. We spoke with an attorney in South China about this. His feedback was that we would spend far more than the cost of the tools and deposits in legal fees and it could take years to find a resolution. In my years of working with China, I have never had a factory do this.

Regardless, Rite obviously did not build in enough of a buffer in the schedule to accommodate unforeseen hiccups. Aside from poor planning, however, this created a certain expectation with the backers, and not only were those expectations dashed, the short window made it that much easier for a year to pass and raise the ire of backers.

What is happening with direct sales?
While Rite fields comments from angry backers on crowdfunding platforms for failing to deliver, the company is taking pre-orders on its website for the product. The site says pre-orders are shipping in Summer of 2019. How can they take money to fulfill that promise when they can’t even fulfill their all of their initial commitments?

In the Feb. 7 update, Patel says:

We will continue to ship Rite Presses to Kickstarter backers as funds become available. Right now our best source of funding toward this effort is the sale of products on our website and Amazon. The stronger the sales are in these channels, the faster we will be able to get all backers’ units. I understand this is not an ideal situation, but it is a path forward. THIS DOES MEAN THAT WE WILL START SELLING RITE PRESS ON OUR SITE IN A FEW MONTHS AT FULL RETAIL, and will use a portion of these sales to help ship backers units.

Rite also made 5,500 of its Essential+, a plastic version of its french press. It sells on on Amazon (but not directly on its site) for $50.

In his Feb. 7 update, Patel explains how the plastic version came to be when the metal versions are MIA:

3) Did you use backers funds to develop the plastic Essential+?

No. I see this question a lot in the comments section. When we decided to partner with Amazon for the plastic press, the first thing I did was raise separate funds for development and inventory of Essential + from outside investors. We used these outside funds to develop, tool and build it. The Essential + however is a backers biggest help. The funds that we can generate from sales of it on Amazon will help us ship backer rewards faster. We will deploy part of the profits from Essential + to ship Kickstarter backer funds.

So, was it naivete or hubris that bogged down Rite? Making crowdfunded hardware is, well, hard. That’s why Kickstarter launched its own hardware studio to help the platform, and backers, make sure product campaigns reach the market.

We reached out to Patel, as well as other people listed on Rite’s team page for clarification via email and Linkedin.

Like the Spinn, the Cinder and the iGulu, the Rite french press is another cautionary tale for would-be backers of crowdfunded hardware projects. Buyer beware, and be prepared for delays.

This article has been updated because of a typo in the crowdfunding number. The amount raised on Indiegogo was $220,400.

Beast Mode: Chirp’s Launches Kickstarter for Cricket Protein Powder

For openminded bodybuilders who want to get ripped, there’s a new type of protein powder out ready for you to chug it down on the way to your morning CrossFit shred sesh.

Today Chirps, the San Francisco-based company which makes insect chips in flavors like Sriracha and BBQ, launched a Kickstarter for its newest product: Cricket Protein Powder. The powder has 20 grams of protein per serving and is made of peas, brown rice, chia seeds, and, oh yeah, insects.

Typically, protein powder is made either with soy, which can lead to deforestation, or whey, which can have, um, undesired gastrointestinal outputs. Crickets are also one of the more sustainable protein sources out there: it takes one gallon of water to produce one pound of crickets, but it takes roughly 300 gallons to grow one pound of soybeans, and over 1,000 gallons to make one pound of whey (because cows).

It should be noted, briefly, that not all proteins are created equal. Both cricket and whey are complete proteins, meaning they contain all 9 essential animo acids, but whey stands out because it absorbs super quickly into the body to stimulate post-workout muscle growth. I couldn’t find any solid information about cricket absorption rates online, so muscle-heads, take that as you will.

The one-pound tubs of protein powder, which come in chocolate or vanilla, are priced at $39 for one, $65 for two, and $78 for three (share one with a friend!). There’s no information on what the retail price of the powder will be. Until Dec. 16th backers can take advantage of the “Holiday Special,” which basically means you get a free cricket cookbook and a guarantee that your order will arrive in time for “Crickmas.”

In fact, Chirps promises to have the first ~3,000 units delivered before December 25th, with the rest shipping in February 2019. Yes, that’s three weeks away — but I’m optimistic they can pull it off. The company already managed one successful Kickstarter campaign in 2014 to launch their cricket chips, in which they reached their $30,000 goal in three days.

Judging from some sleuthing on the Updates page, however, they did seem to have struggled with a 9-month shipping delay. But that was four years ago. Since then Chirps seems to have fixed any production snags; the chips are available in dozens of shops around the U.S. and on Amazon.

Chirps isn’t the only company working to bring insects to the mainstream: Seek Food also launched a crowdfunding campaign for their cricket-based baking flour, fried grasshoppers are a fan favorite at Seattle’s Safeco field, and even celebrities have hopped (heh) on the edible insect bandwagon. Crik Nutrition also makes a cricket-based protein powder, though theirs is quite a bit pricier.

If their goal is to make insect-eating the norm, it makes sense for Chirps to target the health food market. Crickets are a great source of protein, iron, and B12, and when they’re pulverized into a powder or an energy bar a lot of the “ick” factor goes away.

Hopefully Chirps and others can help de-stigmatize bug-eating in the U.S. — and help you shred your quads along the way.

Pizza to the Polls Crowdfunds Food for Those in Long Voting Lines

I’m glued to my social media feeds today as America goes to vote. Among all the pics of people adorned with “I voted” stickers, there were also a bunch of people I follow talking about Pizza to the Polls, a rather ingenious concept that brings together two of our favorite topics at The Spoon: food and technology.

If you haven’t heard about it, Pizza to the Polls crowdfunds pizza delivery for people stuck in very long lines waiting to vote. To send a pie, users visit https://polls.pizza/ and submit a social media link showing a packed polling place, as well as that polling place’s street address. Once the crowd is confirmed, Pizza to the Polls sends in the pies.

And quite possibly the best part? Anyone can donate to make someone else’s time voting a little bit easier/tastier. At the time of this story, Pizza to the Polls has raised more than $218,000 for the 2018 election and sent 5,329 pizzas to 308 polling places in 41 states. For comparison, during the 2016 election Pizza to the Polls raised $43,307 and delivered 2,368 pizzas to 128 polling places across 24 states.

Pizza to the Polls uses Slice to coordinate delivery and says it tries to use local pizza companies where it can. Any money leftover (sorry), will be saved for future elections and/or marches.

Look, though we may be divided as a country, and this is an emotionally fraught, heavy election, pizza is probably the one thing that can bring us all together.

PieShell and OurHarvest Raising Funds for Those Impacted by Pilotworks’ Closure

When Pilotworks abruptly shut down last month, arguably the bigger story was not the closure itself but the number of startups left in the lurch by it. There were at least 175 food businesses at Pilotworks sites that suddenly had to scramble to save their ingredients from spoiling, find a new kitchen space to work out of, and keep maintaining their business to avoid losing too much revenue.

But as we noted at the time, out of that darkness shone the light of the food tech community, which quickly mobilized to help those impacted by Pilotworks by offering to transport or store goods and discounts on new space rental. Now PieShell, a crowdfunding site for food entrepreneurs, and OurHarvest, a New York online farmer’s market, have teamed up to raise funds to help out all the businesses Pilotworks abandoned.

The campaign has a number of “stepping stones,” the first of which is to raise $50,000 to help cover one month’s rent for all 175 companies that worked out of Pilotworks. Stepping stones two and three are at $25,000 each and geared towards helping businesses recover lost inventory and continue to distribute their products.

As the campaign makes abundantly clear, none of the money raised will go to Pilotworks. From the site:

“The funds raised by this project will go directly to, and be divided among, all the Pilotworks member-companies impacted by this closure. Rest assured that NONE of the funds raised by this project will be going to Pilotworks, and/or anyone employed by Pilotworks the company.”

Unrelated to this crowdfunding campaign, OurHarvest has a longer-term goal of raising funds to re-open the old Brooklyn Pilotworks site or establish a similar facility. But that is still a ways off and the details are still being worked out.

The campaign to help those affected by Pilotworks started two days ago and will go on for 28 more days. If you want to help out, you can visit PieShell and make a donation today.

Just Add Cooking Launches Crowdfunding Campaign for Hyper-Local Meal Kits

This week Just Add Cooking launched a WeFunder campaign with a $300,000 goal to raise money for their super-local meal kit delivery service.

Founded in 2013, Boston-based Just Add Cooking (JAC) focuses specifically on providing local food, which they believe will help them succeed in the cutthroat meal kit market. All meat and produce are sourced from the New England area, and all meal kits are packed and assembled in the region.

From their WeFunder page:

Just Add Cooking is different. We’re local and don’t intend to go national – by keeping our operations focused in the Northeast, we’re building a truly local food economy between our customers, farmers, and distributors.

They also hope to distinguish themselves from competitors by letting customers add local produce (eggs, lettuce, etc.) a la carte to their orders. Sort of like meal kit meets grocery fulfillment meets a local farmers market.

JAC is following the path of other meal kits, however, by diversifying from delivery-only into retail channels. To combat low customer retention and razor-thin margins, companies like Blue Apron, Home Chef, and others have shifted from a home delivery model and onto supermarket shelves. In May of this year, JAC started selling through retail channels; as of now, kits are available at 13 Roche Bros. grocery stores in the New England area.

Prices range from $9.50 to $14.25 per serving, depending on the number of people you’re feeding. That’s on the pricier end for meal kits. However, considering that the company uses organic, locally-sourced ingredients, the price isn’t too bad.

Previous to the WeFunder page, JAC had raised $850,000 from investors. If they meet their new goal, JAC plans to use the funds to develop a personalizable meal kit using “AI-driven technology.” We at the Spoon have referred to the fully customizable meal kit as the Holy Grail. In other words, by allowing customers to choose exactly what meals they want and when, a lot of the issues around meal kits (rigidity, dietary constraints, etc.) melt away.

Though JAC didn’t give many details on how they hope to achieve this elusive personalized meal kit, they will have an easier time of it than some of their competitors because of their size. By consolidating their ingredients, clients, and operations in the Northeast, JAC has room to be more flexible with logistics.

Of course, their emphasis on local is a double-edged sword: it also limits them. While the JAC website doesn’t state what percentage of the meal kit will actually come from local farms and fisheries, presumably they’re more of a slave to the seasons than other kits which source from far-reaching areas. Which means JAC customers probably won’t be able to get a juicy Caprese salad or Zucchini in the dead of winter.

The WeFunder page states that JAC will use the funds to expand their delivery beyond Boston to more cities in the Northeast. If they’re smart, however, they will stay relatively local and focus on securing loyalty and return purchases from their customer base. Down the road, though, they could potentially set up regional wings in other areas: JAC Southern California or Pacific Northwest, anyone?

JAC will also launch more meal plans crowdsourced from dietitians, chefs and food bloggers, ready-made options, and even kids’ lunches. It will be especially interesting to see how that last category plays out. Kids meal kits have been seeing a lot of churn lately, with quite a few companies folding around the same time Yummly raised $7 million.

It’s no secret that many independent meal kit services are struggling, especially those which rely heavily on delivery. Despite all the challenges they have to overcome — razor-thin margins, competition from food delivery, etc. — I think JAC may be one of the few meal kit services that actually makes it. By leveraging the popularity of local foods and targeting a regional customer base, they’ve got a sustainable approach in place. And if they can create a customizable meal kit that can scale appropriately and profitably (admittedly a tall order), they just might survive.

Cinder Grill Flames Out, Files for Bankruptcy After Production and Legal Problems

After a year of manufacturing issues and legal woes, Palate Home, the maker of the Cinder smart grill, is shutting down and filing for Chapter 7 bankruptcy. Palate Home Co-Founder and CEO, Eric Norman, posted the news on Indiegogo, where nearly a thousand people had crowdfunded Cinder, giving it more than $550,000 in total.

We kind of saw this coming when we uncovered last month that a San Mateo court had ordered Palate Home to repay a $250,000 convertible note plus interest to Tony Fadell’s Future Shape investment firm. The court issued a summary judgment, which indicated that Palate Home didn’t even provide a defense in the case.

In yesterday’s update, Norman said the lawsuit was the “proverbial straw that broke the camel’s back,” but also said that “the root cause of this is that the company was simply not able to sell enough product, or produce that product consistently and economically.”

Chapter 7 bankruptcy means that Palate Home’s assets will be sold off to pay its creditors. What this means for the future of the technology behind Cinder is unclear. Will the underlying IP be acquired and baked into a different product? Those who used the Cinder (our own Mike Wolf included), really liked the countertop precision cooking device.

This means that the vast majority of those who backed the project will not be getting their Cinder grills, joining the sad chorus of crowdfunding failures which includes HOPii and BrewBot. In previous Indiegogo updates, Norman indicated that there were hundreds of Cinder smart grills in a warehouse in China. The fate of those devices is unclear, or how they will work if the app is no longer being supported.

We’ve reached out to Norman for comment, and will update if we hear more. Here’s the full text of the update he left on Indiegogo yesterday:

Resolution

Dear contributors,

Today I write you with a heavy heart. Our final attempt at negotiating a settlement was not accepted and I have instructed our attorney to file for a Ch. 7 bankruptcy. Unfortunately, this means the company will not be able to ship any more perks. I never expected this to happen, but I do take responsibility for it and I am very sorry this is how things turned out.

We made a generous offer to which the rational response would be to accept, but unfortunately I cannot control the other party. Had that offer been accepted, I believe we would have been able to deliver all perks and continue supporting the product. At this point I have exhausted our options and there is no way to continue operating the business.

While it would be simplest to blame the other party, and I admit that I have felt anger and depression during this trying process, it ultimately comes down to my responsibility as CEO to take in what the world presents and turn it into a viable business. I was unable to make that happen and some promises are left unfulfilled and I feel terrible about that. I’m sure many of you will be angry, and I can’t blame you for that. All I can say is that I am very sorry and I hope that you can accept my apology.

While this lawsuit was the proverbial straw that broke the camel’s back, the root cause of this is that the company was simply not able to sell enough product, or produce that product consistently and economically. Many people thought that if only the product could be explained better, to more people, it would become a smash success, which is why we launched this campaign. We were so excited at the support and were on track to deliver perks and close out. Along the way, we experienced death by a thousand cuts which ultimately prevented that from happening (production was slower and at lower quality than expected, we sold less than expected, and the lawsuit reduced available resources, etc.).

I will monitor the comments for the rest of the day, so post if you have any questions or suggestions.

Eric

P.S. If you’re an entrepreneur, I recommend being wary of convertible notes. Brad Feld mentions in Venture Deals in passing that there can be problems like this, and it has caused enough difficulty that YC created a funding method that does not mature. If you’re like me and you love building product and making it something people love, then any time spent on things like legal matters is agony – you can avoid any chance of this happening by simply not using this type of funding.

Court Ordered Cinder Grill Maker to Repay Tony Fadell’s Investment Firm $294,736

Palate Home, the company behind the Cinder grill, was ordered by a San Mateo court in August to pay $294,736 to Tony Fadell’s investment firm, Future Shape LLC. The default judgment compels Palate Home to repay a $250,000 loan to Future Shape plus $43,737 in interest as well as $999 in costs.

We are not lawyers, but from reading the court documents it looks as though on January 14, 2015, Future Shape provided a $250,000 loan in the form of a convertible promissory note to Palate Home. The original $250,000 plus five percent interest came due on July 14, 2016.

We uncovered this judgment working on a story chronicling the troubles Palate Home was having manufacturing and shipping Cinder to its crowdfunding backers. The Cinder is countertop electric appliance that delivered sous-vide like precision cooking without the need for plastic bags and a circulating water bath, plus the ability to sear meats — something sous vide wands can’t do. Our very own Mike Wolf was a big fan of the appliance.

The fact that Future Shape was involved at all must have been a feather in the cap (and money in the bank, evidently) for Palate Home. Future Shape is the investment firm of Tony Fadell, who is famous for helping invent the iPod and for founding Nest Labs. The fact that he was involved at all seems like validation, at least at the time of the loan, that there was something promising in the Cinder.

Indiegogo updates provided by Palate Home Co-Founder and CEO Eric Norman over the past year outline manufacturing issues that his company was experiencing that were, in turn, delaying the shipment of orders to its crowdfunders.

What’s interesting is the timing. The Future Shape convertible note was issued in January of 2015, came due in July 2016, and Palate Home closed its Cinder Indiegogo campaign in June of 2017, raising $552,405 from 800 backers, almost a full year after the loan was due. The lawsuit from Future Shape was brought in April of 2018.

According to Indiegogo updates from Norman:

February 6, 2018 – A factory in China has 500 built Cinders (after delays caused by a faulty cooking plate) ready to ship to California.

April 2, 2018 – Palate Home still has not shipped grills to California. “Consequently,” writes Norman, “We’ve done everything we can to reduce our expenses. As things started to get tight, we reduced headcount and stopped taking any salary.

April 9, 2018 – In a Q&A style post, Norman writes:

What is the status of the grills?
They are built and accepted at the factory. Your grills are part of a larger order and the factory is not willing to release part of the order without payment in full. We’re in a bit of a Catch-22 situation: Selling more grills without shipping yours is (quite reasonably) difficult. At the same time, shipping your grills without the money to pay the factory for the full order would require us to sell more grills or secure a loan. We are exploring a few ways to solve this and ship to you.

That same day, Future Shape filed its complaint against Palate Home for breach of contract. Curious sidenote: according to a service of process court document filed August 23, 2018, a Summons and Complaint was sent to Eric Norman at the address listed for the designated agent on the corporation’s Statement of Information. “According to the process server’s declaration dated April 24, 2018, no company called Palate Home, Inc., is listed at this address. The current company at that location is called Shenzhen Valley Venture and the process server was informed that no one at that location had ever heard of Palate Home, Inc., or Eric [middle name removed by The Spoon] Norman.” To be fair, as you will read, there is a connection between Palate Home and Shenzen Valley, there could be any number of reasons someone at Shenzen didn’t know about Norman, especially depending on whom was interviewed.

July 2, 2018 – Norman says that he had reached an agreement to sell Palate Home to a Buyer that he says would have meant:

  1. All Indiegogo perks to be shipped with a target delivery of 3 months.
  2. Improvements customer service, software and recipe development, and shipping times.
  3. Initial cash payment earmarked to satisfy obligations to vendors.
  4. Royalties on future sales to provide a potential return for Cinder investors.

The problem, he says, is that the deal is being blocked by one of his investors. We should take a moment to recognize that Palate Home has more than one investor. According to Crunchbase (which, to be fair is not always up to date), Palate Home/Cinder has six:

  • Highway 1 (convertible note)
  • Zillionize Angel (seed round)
  • Scrum Ventures (seed)
  • Y Combinator (seed)
  • Angel List (equity crowdfunding)
  • Shenzen Valley Ventures (seed)

    • (Shenzen was mentioned by the process server in the previously mentioned court document)

This doesn’t appear to include the $552,405 raised on Indiegogo. Further, the $376,000 in total funding raised listed in Crunchbase seems to be just from the Angel List funding. Future Shape isn’t listed as an investor, and it doesn’t look like it’s $250,000 convertible note is listed. Doing the math, it looks as though at some point, Palate Home/Cinder had taken in at least $1.17 million, plus whatever money the company received from the remaining investors.

Going back to Norman’s update on July 2, 2018:

While investments in startups are generally considered to be long-term and non-refundable, we used a convertible note with one investor that gave them control over how to proceed at the maturity date. These notes are made to convert into equity at a future funding round. If a convertible note matures before such a funding round, there’s an expectation in Silicon Valley to either extend the maturity date – so much so that most notes give the company the ability to initiate conversion, and recent vehicles like the YC SAFE do away with maturity all together and simply convert at an equity event. While extremely unusual and unexpected, one of our investors asked for repayment at the maturity date. When we were not able to do so, they threatened legal action. This began a chain of problems for the company.

Norman writes that the “investor,” which is presumably Future Shape from the descriptions, agreed to a sale of the company and using that money to repay the loan. But, he writes: “Despite agreeing to this concept, this investor would not execute a written forbearance which killed any chance of moving forward.” Norman also alleges a number of clerical errors made by Future Shape in its filings.

August 5, 2018 – Norman writes “Since we were unable to reach a settlement agreement, we are essentially waiting for the court hearing which happens later this month.”

On August 17, 2018 a default judgment from the Superior Court of California, County of San Mateo (filed August 23), was issued against Palate Home ordering the company to pay $294,736. As we understand it, the default judgment was given because Palate Home basically did not present a defense.

In an update last week, on September 6, Norman wrote “Hello everyone. We are in discussions and I expect to have things wrapped up by the end of this month one way or the other, so if you can please bear us just a little bit longer. I greatly appreciate your patience.”

What exactly went wrong with Cinder? Is it dead dead, or does this lauded device still have a chance? Will Palate Home appeal? We have reached out to both Norman and Future Shape for more information, and will update this post if we hear back.

Crowdfunding Fiascos: Smart Plate, iGulu, and the Curious Case of HOPii Shutting Down

Crowdfunding your hardware product ain’t easy. Well, getting a crowd to fund your hardware product at least seems easier than actually getting that product to market. Crowdfunding cases in point: The oft-delayed Smart Plate and iGulu are oft-delayed once more, and in mysterious turn of events, crowdfunding darling HOPii has shut down entirely.

First up is Smart Plate, which bills itself as “The world’s first Intelligent Nutrition Platform that instantly analyzes everything you eat.” It’s been a long (now longer), strange trip for the combination plate + scale + mobile app that recognizes your food, weighs it and gives you its nutritional information. From the original pitch on Shark Tank that aired in early 2016 to a crowdfunding campaign that raised more than $150,000 to the promise of a ship date last summer, the Smart Plate has gone through a few iterations over its many months in developments. And based on an Indiegogo update earlier this month, backers are going to have to wait a few months more. From that update:


“…unfortunately, we have a new shipping date due to some manufacturing issues that developed during the latest quality testing.

…The new shipping date is this Holidays (November/December 2018).

We fully understand that the product delays have been causing a lot of frustration, but as they say ‘A delayed product is eventually good, but a rushed product is forever bad.’ We sincerely ask for your understanding and support.”

Backers who have been waiting are understandably upset and are venting on the Smart Plate campaign page. However, it won’t do them much good. As the refund policy points out:

“From now through shipping, we will not be able to provide any refunds. This is because all funds have been used for the production and materials of SmartPlate. We’ve already placed the order for 10,000 SmartPlates to be manufactured, and the production process is on-going and cannot be reversed at this point. We’d like to ask for your patience and support one last time. Give us until shipping, and if you are not satisfied with what you get, we will give you a full refund.”

Elsewhere, when we last checked in with the home beer brewing machine iGulu in December, that company had bumped its promised delivery date from Q3 of 2016 to July of this year. At that time, the company had even raised funding from three different Chinese venture firms. The amount raised was undisclosed, but iGulu’s CEO told us via email that it was enough to “…cover the full mass production and delivery for our first-generation machine. Then it also can support us to jumpstart development of our second-generation machine.”

Looks like the company should have raised more, as an Indigogo update from iGulu on August 5 said:

“Finally, we’d like to address all questions regarding the shipping date again. We have heard your voices, and we don’t mean to ignore them. We were overly optimistic about the shipping date when we launched the crowdfunding campaign. We certainly won’t make that mistake again. Instead, we chose to be transparent about development, testing, and production. Of course, there has been a fair share of bumps in the road. Due to our small company’s production numbers, we are not in a strong negotiating position with any of the suppliers. This position is because they can dictate the timing of the production. At this point, we feel it’s more productive to be prudent and provide honest updates on each stage of development rather than taking a guess and then having to correct it. Thank you for your understanding.”

Can’t miss a new ship date if you don’t make one, I guess.

Finally, we were taken aback to hear that HOPii, another crowdfunded home beer brewing system that had raised more than $380,000, has shut down completely.

HOPii’s sudden demise was surprising to us in particular because their countertop beer machine was a big hit as part of our Startup Showcase at last year’s Smart Kitchen Summit, and was Innovation Award Honoree at this year’s CES.

In an update on Indiegogo on May 24, 2018, HOPii CEO, Jong Shin wrote:

“This is going to be an update that no founder of a company would ever want to write. There is never a good way to deliver a bad news, but I am going to be as transparent as possible. We recently ran into an unexpected tragedy and unfortunately will have to close down the project. We will be sending you the details shortly in a separate email.”

It’s when you hop (pardon the pun) over to the Kickstarter comments page that things get intense. There’s a thicket of comments and angry backers and updates from HOPii, but it appears that there is some legal battle (possibly with LG, if one commenter in the thread is accurate) going on in Korea. Shin won’t provide details as the litigation is ongoing, but an update from three months ago says he was in Korea for the “start of the battle,” and that “justice will win and we will fight to stand for what we believe in.”

Additionally, there are walls of text outlining in detail a litany of production and money issues. There’s so much that we are actually putting together a follow-up story and have reached out to Shin for more details. We’ll provide a link to that story when it goes live.

Unfulfilled promises in crowdfunding projects help illustrate why Kickstarter launched its Hardware Studio to help make sure hardware projects don’t crash and burn through so much of other people’s money.

TimberFish Launches IndieGoGo to Raise Trout on Brewery Waste and Wood Chips

It’s no secret that wild-caught seafood is fraught, what with its declining supply and associations with inhumane labor practices. Many tout farmed fish as a more ethical and sustainable (not to mention cheaper) way to satisfy our seafood cravings, which is why aquaculture is the fastest growing food-producing sector. In fact, as of 2016, aquaculture produced half of all fish for human consumption.

While aquaculture doesn’t lead to overfishing of limited ocean resources, it can have other unsavory consequences. Farmed fish produce a lot of waste (AKA fish poop), and can sometimes cause chemicals to leak into our drinking water.

And then there’s the fish food. Often, farmed fish are fed pellets of corn, soy, unwanted chicken parts, or even fish meal. Sometimes people even catch smaller, less popular fish from the ocean and grind them up to feed their farmed bretheren. Obviously, it takes a lot of energy and environmental resources to create all this fish food, and even more to filter out waste from fish enclosures.

TimberFish Technologies‘ eponymous technology promises to offer a more palatable alternative to aquaculture. The company launched in 2008 and have so far raised or won $260K, which they used to build a test facility at Five & 20 Spirits & Brewing facility in Westfield New York.

There, they feed their fish not with animal parts or corn, but with a combination of nutrient-rich wastewater from food processors (such as breweries, distilleries, and wineries) and woodchips. Microbes grow on the woodchips, small invertebrates (like worms and snails) eat the microbes, and the fish eat the invertebrates. The fish poop is grub for the microbes, and the whole cycle starts again.

In addition to seafood, the TimberFish system’s only outputs are clean water and spent wood chips, which can be used as a biofuel or soil supplement. Another benefit is that TimberFish can build their aquaculture farms close to cities, shortening the supply chain and guaranteeing fresher fish.

This is obviously not as idyllic as plucking salmon from the Alaskan seas or catching trout in a mountain stream, but, as aquaculture operations go, it’s not bad. And it’s certainly cost-efficient; diverting a waste product to make it profitable.

This week TimberFish Technologies launched an IndieGoGo campaign to raise funds for their no-waste, sustainable aquaculture system. If they reach their $10,000 goal, they’ll use the funds to design plans for a larger commercial facility, which they estimate could produce 2 to 3 million pounds of fish per year.

Investment has been slow so far, but personally I hope TimberFish gets the funds it needs to keep swimming along towards its goal of creating a more sustainable agriculture.

If you’re in New England and want to learn more about blue tech and sustainable seafood, join us for our next food tech meetup in Providence, RI on July 17th!

Food Tech News Roundup: Cold Brew, Avocados, and Robot-Made Burgers

Were we the only ones whose heads were spinning with all the food tech news this week? Especially the funding announcements. Corporate catering company ezCater raised $100 million, cultured fish startup Finless Foods snagged $3.5 million, and Hungry raised $1.5 million. And that was just in the U.S.! There were quite a few other big fundraising announcements from food innovation companies around the world, from food delivery to meal replacement shakes.

Here are some of the other food tech news bits — funding-related and otherwise — from around the web this week. This one’s a bit longer than usual, so we’ve divided it up into categories for you.

Crowdfunding updates

Dash Rapid Cold Brew Available In Stores
Tired of waiting a grueling 24 hours for your cold brew to be ready? This week Dash Rapid Cold Brew, which claims to create cold brew coffee in 5 minutes, is now available in stores and online. It’s the latest product from Storebound, the company that brought you such tech-enabled appliances as the Pancakebot 3D Printer and the SoBro Coffee Table. After raising funds for the product on IndieGoGo, the product found its way online earlier this year to mixed reviews. At the time, the company told us they were working on adjustments to the product, so let’s hope they’ve gotten those fixed as the product heads to brick and mortar retail for $129.99.

IoT-enabled brewing airlock PLAATO ships
This week PLAATO, an IoT powered smart airlock we wrote about last year that lets you monitor beer fermentation  via phone app, has started shipping. The Norwegian project had raised over $200,000 on Kickstarter, beating its $30,000 goal in the first 12 hours. The PLAATO, which monitors fermentation levels, CO2 amounts, and temperature throughout the brewing process, will retail for $149.

Robots and… more funding.

Creator offers $6 cheeseburgers made by robots
Restaurant/culinary robotics company Creator opened up their robotic burger chef to a select few this week before their June 27th opening. The San Francisco-based company, formerly Momentum Machines, will serve up robot-created cheeseburgers for $6. Automated chefs are all the rage right now, from Miso Robotics’s burger-flipping Flippy to Chowbotics’ automated food bowls. If you want to stay on the cutting edge, be sure to check out The Spoon Automat podcast, which covers all things food robots.

 

Bossa Nova raises funds to scale up inventory robots
This week Pittsburgh-based Bossa Nova raised $29 million to increase the production of their mobile inventory robots. The robots work perform tasks like shelf-scanning to facilitate re-stocking in retailers like Walmart (its currently in more than 40 of its stores), and are apparently 50% more efficient than human workers. This latest funding round brings Bossa Nova’s total war chest to $70 million.

Everything else

Beyond Meat goes to Canada
A&W Services is bringing Beyond Meat burgers north of the border into Canada. Starting July 9th, the national restaurant chain will offer the plant-based patties in its nearly 1,000 locations across the country. This will make A&W the first Canadian chain to carry Beyond products, and will also mark Beyond Meat’s largest restaurant chain partnership to date.

 

Apeel avocados now on Costco shelves
Midwest Costco stores got a new item in their produce section this week: avocados coated with a plant-based protective layer by Apeel Sciences, which should make the fruit last up to four times longer. According to the Washington Post, Costco hopes to roll out these long-living avocados in their stores nationwide. The next Apeel-ified produce to look out for: citrus and asparagus.

 

Nomiku debuts Nima-tested gluten-free meals
This week sous vide startup Nomiku partnered with allergen-testing sensor Nima to put out a bundle of gluten-free meals. Nima’s portable, handheld sensor can detect even trace amounts of gluten, and they just unveiled their peanut sensor a few months ago. The bundle will source from Nomiku’s library of gluten-free options.

Did we miss something? Tweet us @TheSpoonTech!

Kickstarted or Stopped? We Check In On Food Tech Crowdfunders To See How They’ve Fared

We are always looking for the next big thing in foodtech here at The Spoon and one of the first places we look is Kickstarter and Indiegogo.

But covering a campaign doesn’t guarantee success and, even when a product hits or exceeds its funding target, success doesn’t always mean shipping product. With that in mind, we thought we’d check back in on some of campaigns we’ve covered to see if they reached their funding goals and how close they are to shipping to backers.

NutriScale

Project: A chopping board + food scale in one
Funded? No. Raised just $1,239 (Canadian) of a $50,000 goal

GardenSpace
Project: A connected watering device for home gardens.
Funded? Yes. Raised $34,069
Delivering? No. Campaign creators said they did not receive the minimum number of orders, so they said they are refunding all backers.

Mealhero

Project: A combination of frozen meal kit delivery and countertop steam cooker.
Funded? Yes. Raised €79,151.
Delivering? Mealhero is using the money to expand farther into Europe, said it will roll out in Belgium and The Netherlands in September 2018.

Forktula

Project: A silicon spatula you affix to a fork to scrape up sauce.
Funded? Yes. Raised $11,215 (Canadian)
Delivering? In a Kickstarter update on December 17, campaign creators said people who bought Forktulas should expect them to arrive “any day now!”

Nomsly

Project: Kids’ lunch meal delivery service.
Funded? Yes. Raised $30,977
Delivering? Nomsly was already delivering lunches in the Boston area, and was using the money to buy equipment and expand into New York and Philadelphia.

Boiling Beeper

Project: Floating alarm that beeps when your water is boiling
Funded? Yes. Raised $10,088
Delivering? A campaign update in December said the company was on track to deliver devices by the end of January 2018.

iGulu

Project: Countertop beer brewing appliance
Funded? Yes. Raises $1.1 million
Delivering? No. Shipment of devices has been delayed until July 2018.

BrewArt

Project: Home beer brewing system
Funded? Yes. Raised $33,957
Delivering? Yes. According to comments left on Kickstarter in October, people were receiving their devices. BeerDroid and BrewFlo are available for purchase on the BrewArt site, on Amazon as well as, of all places, select Bloomingdales locations.

Hopii

Project: Countertop beer brewing appliance
Funded? Yes. Raised $382,321
Delivering: Estimated delivery for backers is June 2018.

Yomee

Project: Countertop yogurt maker
Funded? Yes. Raised $136,808
Delivering? Estimated delivery is April 2018

While this is a small sample size, it looks like crowdfunding is still a robust option for the right foodtech device. Fulfillment, especially for higher-end devices remains a challenge and something potential backers should still be wary of. We’ll keep tabs to see how shipments scheduled for later this year go.

Do you have a cool project going up on Kickstarter? Send me an email and let me know.