Smartwatch pioneer Pebble recently announced they were laying off 25% of their staff. Pebble CEO Eric Migicovsky told Tech Insider– “We’ve definitely been careful this year as we plan our products,” Migicovsky said. “We got this money, but money [among VCs in Silicon Valley] is pretty tight these days.”
Perhaps you have heard of Pebble as they were “one of the first companies to launch a modern smartwatch”. Unfortunately, first doesn’t mean much in Silicon Valley, especially when your competitors are tech giants like Apple and Samsung.
Pebble was also one of the most successful KickStarters ever. Not only did Pebble’s 2012 Kickstarter raise $10.3 million but when Pebble went back to Kickstarter, in 2015 with an updated product, they raised $6.2 million in less than 4 hours. In total, Pebble raised over $30 million with two Kickstarter campaigns.
Since its Kickstarter success, Pebble decided to look for a more traditional VC funding. Unfortunately for them, it has been a bumpy road. Last May, TechCrunch reported that the company turned “to a Silicon Valley bank for a $5 million loan and $5 million line of credit” versus more traditional equity funding. As of writing this “Migicovsky also confirmed that his company had raised $28 million in debt and venture financing over the past eight months”. Even with the Kickstarter success and VC funding, Pebble is still forced to layoff staff.
The slow IPO market, fears of a unicorn bubble, and fierce competition in the smartwatch space have caused VCs to be cautious. Perhaps this will be a blessing in disguise for Pebble, the kings of crowd funding.
With Reg A+ transforming the crowd funding landscapes and the recent success of Elio Motors’ Reg A+, this may be perfect timing for Pebble to use Reg A+ to alleviate their funding problems. While I haven’t been able to find anything official regarding a Pebble Reg A, this may be the natural solution for the kings of crowd funding and other tech companies struggling to raise capital in Silicon Valley.
Ben Kotch is a managing director and investment committee member at Acquis Capital, LLC, a private investment firm that specializes in acquisition funding. He has extensive experience with both private and public companies. Ben graduated with an economics degree from Bentley University where he concentrated in entrepreneurship and law.
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