Startups Venture

Robot-maker Anki Issues “Series 1” Shares In New Funding Round

Anki, a consumer robotics startup, has raised new external capital, Crunchbase News can report.

The company issued an unusual class of shares in the transactions which indicates the company may have recapitalized. Also, some high-profile investors are leaving its board. Prior to this new funding round, the company has raised at least $182 million in venture capital, according to Crunchbase data.

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A company spokesperson said Anki is making a product transition from AI toys to home robotics. Other aspects of the company are also in a state of flux. Marc Andreessen of Andreessen Horowitz and Danny Rimer of Index Ventures are leaving their director roles, to be replaced by Lawrence Unrein of JP Morgan and Colin Bierne of Two Sigma Ventures, both prior investors in the company.

The company recently completed a $1.88 million product crowdfunding campaign for Vector, a small home robot, but it was public filings for other funding that caught our attention.

The Deals

On Friday, the company filed paperwork with the SEC for two separate transactions.

The first: an equity transaction for $27.24 million of what’s being referred to as “Series 1 Preferred Stock.” The filing says that $17.15 million had already been raised from five participating investors. Code Advisors, a San Francisco-based investment banking firm, is due to receive $1.5 million worth of “Series 1 Preferred” shares as a finders fee for the transaction.

The second: a transaction involving debt and “[an] option, warrant, or other right to acquire another security.” The company secured the entirety of $6.103 million it had targeted for that transaction.

From the filings alone, it’s difficult to know the terms of each part of the deal.

An Anki spokesperson confirmed that the company recently raised capital. They said the company raised “$18.5 million in an inside round” in preparation for the launch of its new home robot, Vector, later this year. The company said its 2017 revenue “approached $100 [million], and we will exceed that this year [in 2018].”

The company made no direct comment about the equity filing or its plans to fill out the target raise of $27.24 million, as listed on that Form D. The $6.103 million debt facility wasn’t mentioned either.

Board Changes

On March 10, 2017, Anki amended its original Series D filing to state it has raised an additional $25 million, bringing the total size of its Series D round to $77.5 million.

The listed board members on the March 2017 filing are:

  • Boris Sofman, the co-founder and CEO of the company.
  • Mark Patalucci, co-founder and head of cloud AI and machine learning at the company.
  • Hanns Tappeiner, co-founder and president of the company.
  • Marc Andreessen, co-founding general partner of Andreessen Horowitz.
  • Danny Rimer, a partner at Index Ventures.

In the filing for Series 1 from Friday, the listed board members are:

  • Boris Sofman
  • Mark Patalucci
  • Hanns Tappeiner
  • Lawrence Unrein, managing director and head of the private equity group at JP Morgan Asset Management (JPM)

A spokesperson from Anki told Crunchbase News that Colin Bierne, founding partner of Two Sigma Ventures, will also join Unrein on the company’s board.

So, Andreessen and Rimer are off, to be replaced by top brass at Two Sigma Ventures and JPM. An Anki spokesperson said Index Ventures and Andreessen Horowitz “have been instrumental in the success of Anki and have helped pave the path forward for our business.“

JP Morgan’s venture group is a long-time investor in the company. The Anki spokesperson also said that JP Morgan, having led the company’s Series C and Series D round (and presumably this round as well), is the company’s largest shareholder.

And apart from JP Morgan, Two Sigma Ventures, Code Advisors, the investment bank receiving a finders fee on the deal, it’s unclear which other prior insiders are participating in the deal.

Sometimes, certain classes of private investors are invited to re-invest to maintain some pro rata share of the company. However, in this particular case, we don’t know further specifics.

The “Series 1” Question

How companies (or, more often, their lawyers) name rounds matters. A common standard helps investors from different firms understand the capital structure of a company easier. The industry standard is to label the earliest-stage rounds as “seed” or “angel” depending on who’s investing. At some point, when a company gets sufficient market traction, its first VC round is typically called “Series A.” Its next rounds would be “Series B,” “Series C,” and onward from there.

For its part, Anki’s most recent venture round was a Series D, which ultimately secured roughly $77.5 million for the company, according to its SEC filing. However, the new equity round was not labeled “Series E,” as would be expected.

Labeling this venture round a “Series 1” indicates the company has potentially recapitalized.

Crunchbase News covered another “Series 1” round in the past, which Teespring raised during the course of its recapitalization. In that transaction, Teespring’s existing preferred shareholders were crammed down into a new class as it issued a new class of preferred shares and wrote down the value of common stockholders to zero. That is definitely a worst-case scenario and probably not what happened with Anki, assuming the company’s stated revenue (again, supposedly exceeding $100 million in 2018) is correct.

When explicitly asked of Anki recapitalized, the company spokesperson didn’t deny it, instead referring to it as an “inside round” (which most recapitalizations are). The company has not responded to followup questions, and its prior investors have not responded to requests for comment.

Regardless, the company now almost certainly has capital on deck to see Vector through the critical holiday sales cycle. What price it paid for that runway, however, isn’t clear.

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Illustration: Li-Anne Dias

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