Startups

Juul Raises $650M Of Its $1.25B Mega-Round

Juul, the popular purveyor of nicotine vaping products, is well on its way to closing a funding round that could top out at more than $1 billion.

The rapidly expanding firm has raised $650 million out of a stated goal of $1.25 billion, according to an SEC filing. Previous reports peg the firm’s valuation after the round at around $15 billion, pre-money.

Juul’s financial performance over the past few years has been characterized by rapid growth. The company anticipates to mimic prior growth rates in 2018 while generating significant earnings before certain expenses (EBITDA).

Who’s Involved?

From the filing, it is hard to tell who is putting fresh money into the company. The filing does indicate, however, that ten investors have invested in the round so far.

The form lists a number of non-executive directors, all of whom are prior investors in the company. Those individuals include:

  • Nicolas Pritzker, a former chief executive of Hyatt Hotels and a venture capital investor who co-founded Tao Capital Partners, an investor in Juul.
  • Riaz Valani, a general partner at Global Asset Capital, a Berlin-based private equity firm.
  • Harold Handselsman, a Chicago-area lawyer and investor who served as a senior executive officer of the Hyatt Corporation and as general counsel of The Pritzker Organization, LLC, a private investment firm.

Back in 2007, James Monsees and Adam Bowen founded a company called Ploom, which was among the first to develop and market electronic nicotine vaporizers in the U.S. market.

Both Pritzker, Valani, and Handselsman have been listed as board members on SEC filings dating back to the earliest days of the company.

Valani and a person named Thomas Dykstra, who previously represented Tao Capital on the board before Pritzker himself, are listed on a 2011 filing for a $3.3 million equity round, the first funding-related SEC filing from Ploom, Inc.

The company would rebrand to PAX Labs, and released a series of popular loose-leaf herbal vaporizer, which is popular with cannabis enthusiasts, of the same name. PAX Labs launched the first Juul-branded product in June 2015. By the time PAX was raising a $25 million round back in 2015, Pritzker replaced Dykstra as Tao’s board representative and Hanselsman joined the company’s board.

Juul was spun out as its own standalone company in 2017. Monsees is currently the chief product officer of Juul, and Bowen is Juul’s chief technical officer.

The Vice Factor

Some investors are staying clear of Juul, despite its fundamentals, due to its status as a vice company of sorts. It sells something for you that isn’t healthy, and teens are using it, thus rendering it worthy of avoidance.

That line of argument may feel slightly rich coming from members of an investment industry that funds companies that lose our data, allow for cartoonish disruption of our elections, trick our minds to glue us to our devices while making us miserable, and are morally fine with abetting the growth of the “gig economy,” and the underclass of economically precarious contract workers stripped of benefits and dignity. (Not that the same venture capitalists would ever allow such treatment of themselves.)

But a safer smoking device that many folks use as a harm-reduction method that some parents are concerned could lead to more underage nicotine consumption? That’s the hill investors are willing to die on.

It will be interesting to see who fills out the round. With its financials, Juul should be able to close out the $1.25 billion in quick order.