By Nathan Beckord
If it’s easy to demonstrate the value of your product, crowdfunding can be a good choice.
Mike Bell wants restaurants to flip the script on how they flip fries. His company, Miso robotics, designs and builds robots and AI solutions to prepare food in restaurant chains. As CEO, Mike looks for ways to get Miso’s most popular robot, Flippy, on cooking lines worldwide.
Flippy is “an overhead robot on a rail that installs above a fry station and takes over all the frying operations for quick service restaurants,” explains Mike.
Miso anticipated a looming labor shortage, particularly in the fast food industry, long before the pandemic. Now the company’s solutions are well suited for a full-fledged labor crisis. Luckily for Mike, that has led to even more interest in products like Flippy.
A production warehouse may need a small number of robotic arms to function, but there are thousands of locations per restaurant chain, across the United States and the world. Naturally, Flippy has caught the attention of many quick-service restaurant chains looking to offset the labor crisis.
That huge market and low cost of entry ($3,000 per share) look like dollar signs to crowdfunding investors. Miso Robotics raised $60 million through crowdfunding in Series C, D, and E rounds.
Mike explains what crowdfunding looks like for Miso Robotics, what types of companies can benefit from it, and the benefits of crowdfunding over venture capital.
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Why crowdfunding?
“The short answer is because we could”, jokes Mike. Miso raised about $15 million in its Series A and B, but suffered a down round (a valuation less than the previous round) for its Series C. Like many startups, the company had yet to develop its product-market fit not quite found, but was prepared for a new direction with the Serie C increase.
Rather than face shareholder criticism in a traditional corporate environment, Mike thought it was a good time to take advantage of the SEC’s new crowdfunding regulations.
He found two major benefits of crowdfunding for Miso. One was for thousands of shareholders to form one entity on the corporate dressing table. That means thousands of people cast only one vote on board matters. The second benefit: the ways crowdfunding differs from seeking venture investors. Crowdfunding does not utilize the extensive due diligence that a traditional venture firm employs. Crowdfunding only requires the company to prove the value of its product (to non-accredited investors).
This initial lack of control can be beneficial as a business grows.
“I’ve been to those board meetings where you have to explain why you’ve had some bad quarters,” Mike explains about the difference between venture and crowdfunded shareholder meetings.
“You no longer have that with crowdfunding. I have shareholder meetings and they are friendly – and there are only 20,000 people. [I’m] not saying everyone is happy, but it’s just a different environment [in which] run a company.” So far, 20,000 people have been convinced of the value of Miso, bringing in about $3,000 each. Each investor has a low barrier to entry, but the payoff for the company is huge.
Why not crowdfunding?
Mike admits that crowdfunding is not a ready-made solution. “It doesn’t suit a lot of companies, especially a lot of technology companies,” he says. “You have to be able to tell the story very simply and very clearly. And it has to appeal to people.”
It’s easy for Miso to demonstrate the benefits of Flippy and the needs of the market. Potential investors (and buyers) can watch a short demo of how the product works, and there’s little doubt about its use. So for B2B companies, as well as those that offer complex solutions that require a lot of explanation, crowdfunding may not be the best choice.
Best practices for crowd raising
Here are Mike’s tips for running a successful crowdfunding campaign to raise your own round:
- Choose your platform: There are many crowdfunding apps to choose from. Miso Robotics uses the WAX Invest platform. Shop around to find which one makes the most sense for your business and its goals.
- Don’t save on a marketing budget: Crowdfunding is not a ‘if you build it, they will come’ proposition. Investors only arrive when you bring them in. Miso uses a mix of a PR team, social media marketing, and media buyers to spread the word about crowdfunding efforts. And when planning marketing strategies, make sure they are in sync with the timing of your crowdfunding campaign(s) to build momentum.
- Hang around the waterholes: Target the websites and newsletters that go out to your best-fit potential investors. Add in a healthy press release schedule and you’ll get attention.
- Watch your language: The SEC has strict rules and regulations about what you can and cannot say to entice investors. Work with an attorney familiar with crowdfunding to make sure the words you choose don’t violate SEC terms and ruin your round.
Look for more information on Miso’s current Series E round (it closed January 2023). its listing on WAX Invest.
Article is based on an interview between Nathan Beckord and Mike Bell on an episode of the How I raised it podcast.
About the author
Nathan Beckord is the CEO of Founder suite. com, that creates software to raise capital. Foundersuite has helped entrepreneurs raise more than $9.7 billion in seed and venture capital since 2016.
