Boombotix Raises $4 Million Financing Round

new capital infusion allows company to progress wearable audio technologies

This afternoon marks an incredible milestone for the next phase of Boombotix. Today we announced a $4 million strategic investment from new and existing investors. New investors include The Social+Capital Partnership, Baseline, Red Hills, Great Oaks and Grishin Robotics, while existing investors participating in the round include Walden Venture Capital and David Dolby.

Boombotix has spent the last three years developing the highest-quality audio hardware and software products and solidifying its operations. This new investment will enable us to rapidly expand our presence in the market with our unique audio products that combine hardware and software to create a fresh approach to how people enjoy their music.

Since launching in 2010, Boombotix has seen triple-figure sales growth year-over-year. They have shipped a line of speakers called Boombots into national retailers like T-Mobile, Microsoft and hundreds of specialty retailers in action sports and cycling. Since the launch of the Boombot REX, the company has also seen tremendous growth in their online segment with etailers including, Amazon and their own direct eCommerce.

“I’ve had a number of audio devices, but the Boombot design has brought a level of wearability that is unique in a world full of just headphones,” said Ted Maidenberg, partner at The Social+ Capital Partnership. “The Boombotix team continues to show impressive innovation with building an amazing user experience and we are looking forward to amplifying that experience.”

Wearable technology not only has to overcome technical hurtles, but it has to drive trends in fashion and design too. The Boombot REX has been heralded for phenomenal industrial design while blending acoustic performance with software. Boombots have always been a great extension to smartphones. The technologies we are developing are going to continue making mobile audio more accessible and less invasive than ever.

At the end of the 2013, Boombotix launched a mobile app called SYNC on iOS that synchronizes audio content on 4G/LTE networks. This is the first technology that allows users to create synchronized peer-to-peer listening over mobile. This is just part of the new audio listening experience that Boombotix is creating.

The Bluetooth speaker market has seen triple figure growth over the past two years with over 2.2 million units sold domestically in 2012[1]. Boombotix has demonstrated that it has a brand that is commanding strength in strategic verticals that can potentially expand into double-figure market share very quickly.

I’m extremely excited to build out our organization in the upcoming years. We have some challenging execution to perform, but this is truly the opportunity of a lifetime.


The Lean Hardware Startup Model

Lean Startup

what to do after your crowdfunding success

First off, you need to build the product you promised and deliver it to your backers.  That is first and foremost.  Let go of being a perfectionist and ship out your MVP (minimum viable product).  If you even got within 90% close to what you promised, you will have your backers support.  If you can deliver it even within several months of what you promised, you will still have your backers support.

While you’re building your product, you should spend some time thinking about what your next moves are.  The best entrepreneurs are visionaries that are able to see where their company is going months or years in front of where they are.  They are also able to see where the market is going well before it’s already there.

securing additional financing

Anything you can do to get some additional runway is a good thing.  Here’s the tricky part.  If you want your business to really be bankable, you need to figure out how to get it to a $3-5 million yearly run rate.  More likely $5 million before players and strategic investors will really take notice to your brand.  Do it being either profitable or really close to break even.  In hardware, unlike software, your margins are important.  Your growth will be looked at with as much scrutiny as your gross margin.

Don’t even bother wasting your time with traditional banks.  You really have three options.  You can raise equity based financing (selling part of your company), getting SBA loans, and non-traditional financing through AR (accounts receivable).  If you can spike your sales and create the beautiful problem of demand exceeding supply, then you’re in good shape.  This model with an insanely lean overhead is the way to go until you can get more support from a bank.

Do not bank on getting support from Venture Capital in MOST hardware cases.  Right now, the exception is that if you have some really dumb rudimentary hardware with a monetization off high margin software, you can look at VC funding.  In the case of most consumer products, plan on proving yourself for a long time and building up slow and steady.  If you don’t plan on investing a MINIMUM of three years on your product/idea, you should probably walk away right after you ship off to your crowdfunding backers.   There is no shame in this.  Life is short and you should pick a career path you will be happy doing for a long time.

The financing niche righ tnow

So how do you get from $50k to $5 million without much capital?  It’s HARD.  Leveraging your balance sheet in AR financing (or factoring) is tricky.  We’ve used Bridge Bank for a $500k A/R line and Marble Bridge for factoring.  The factoring was pretty sweet because in the wholesale business, they actually act as your A/R department and they proactively make calls to do collections.  It is pricey, but it helps cash flow and it also saves you from hiring someone to do A/R.

What I see in the market is that there are a lot of companies that can reach the initial success of product inception, but few that have support to scale into a successful operating business.  Lighter Capital is providing some revenue based financing which offers facilities based on the business run rate.  To me, crowdfunding has become the new platform for seed stage, but there is a big gap in the early stage $1M-$5M.  Finding the right partnerships to get your business to be bankable is tricky.  My best recommendation is to pitch till the end of the earth, get struck by lighting in a bottle, while maintaining a healthy viable company.