uBeam is now Sonic Energy - And Raising a Down Round

Last we left uBeam they'd laid off half their staff and co-founder Perry had left entirely. In the last few days, uBeam has rebranded themselves as "Sonic Energy" (though apparently has some difficulty in spelling their name correctly, continuing the stellar performance we've come to expect from their marketing department). I'm guessing uBeam is something of a problem in Google searches on the company, I wonder why. 

But importantly, they're raising a new round (calling it a Series 1, which is new to me, it's really a massive down round Series C), led by Upfront Ventures (Lead in the Series A and B) again alongside OurCrowd (convertible note inbetween A and B and possibly in the B). They are looking for up to $7.5m at a pre-money valuation of $20m (about 27% of the company to the new investors), which compares to the estimated $120m to $140m post-money valuation after their Series B. 

It's most certainly a down round, where the valuation is lower in a later round, and has serious consequences for wiping out existing shareholders - which is particularly interesting as I believe the major shareholders getting taken down are Upfront, OurCrowd, and Perry herself.  Are two of those three taking major write-downs in their prior investment, just to regain it with the new investment? Doesn't that mean they are putting money in to end up exactly where they are now (or perhaps worse)? Unlikely that this will be happening - more likely is that the Preferred stock holders, Upfront and OurCrowd, will have some anti-dilution terms in their agreements and will maintain their existing % ownership as well as add the new %. Perry, no doubt, will be reduced from what I think was the single largest shareholder to a minority shareholder, a point probably not lost on Upfront and OurCrowd. 

To me it's telling that across multiple major funding rounds it really has only been Upfront and OurCrowd (crowdsourcing) that have been seen to invest. No other institutional investor or strategic with strong due diligence capabilities have taken a stake in the 5 years since the Series A, which if it were the billion dollar idea claimed and just on the verge of explosive growth I think we'd see. Can't the amazing VCs at Upfront persuade some of their other big VC buddies to participate, why rely on crowdfunding and small investors? So right now it seems to me the only people willing to invest are those with a financial incentive to ensue ongoing funding (ideally from others) and those who have no due diligence capabilities.

It's also interesting that OurCrowd are back in for another round - they are hardly touting the success of the Series B investment, and appeared to have taken that off their site.

Where are uBeam/SonicEngery going with this? I expect the narrative the company is putting out is that they have a solid technology at developer kit level, IP to back it, a revamped team and company, and building relationships with key partners - and suggesting to investors this is a quick "in and out" and the company will be sold in a couple of years. If the developer kit was so amazing they'd be showing it off a lot more publicly, and other large VCs would not be allowing crowdfunders to take a slice of this future growth. In my opinion, the exercise for the CEO is as it has always been - put lipstick on this pig and get it sold to a greater fool.

My advice to anyone thinking of investing again at this stage - don't be that greater fool.

Perry's Future
And what is former CEO Perry doing? Seems like it's brain/machine interfaces with Elemind, based in Boston, and "next generation wearable neurotechnology". Over a year ago she had tweeted about something that allows you to fall asleep at the touch of a button, I wonder if this is it?

She had pictures of herself with Marc Cuban in June, so perhaps this funding well has not run dry for her? It doesn't seem to be a company she founded, so has been brought in as a CEO, perhaps as the source of the funding contacts. Maybe, finally, she can use this as the vehicle to give those pesky engineers the finger the way she has always wanted to.

Text of Series 1 offer:

OurCrowd is reinvesting in uBeam (which recently rebranded to SonicEnergyTM) in an up-to-$7.5M Series 1 recapitalization round led by Upfront Ventures, a leading Los Angeles-based VC with investments in companies such as Bird (recently valued at $2.5B by Sequoia), Goat (recently raised $100M from Footlocker) and Ring (acquired by Amazon for over $1B).

uBeam seeks to deliver Always-On Wireless EnergyTM at a distance, utilizing ultra-safe ultrasonic technology to deliver reliable, wire-free charging. uBeam has developed proprietary transducers, transmitters, receivers, and custom enterprise software. The company plans to deliver wireless power to a wide range of electronic devices in the high growth Internet of Things (IoT) sector, including automotive, aerospace, healthcare, industrial and home.

 Listen to a webinar with Simon McElrea, uBeam's CEO, and Jon Medved, OurCrowd CEO and Founder, to learn more about uBeam:

ubeam iii webinar

Wireless Charging Market

While the wireless charging market is growing at a CAGR of over 40% and expected to reach ~$21B by 2023, it remains largely untapped due to current technological limitations with induction-based charging methods and many power-at-a-distance technologies being limited by the Federal Communication Commission (FCC). uBeam claims that it has a patent-protected ultrasound technology that is FCC approved and safely transmits wireless power at a distance. IHS Markit also forecasts that by 2030 there will be 125 billion electronic devices that will need safe and always-on power. The largest vertical in this growth market is in IoT (smart home, aerospace, automotive, healthcare, commercial, etc.). uBeam is focused on this space, having already secured POCs with three global tier-1 Original Equipment Manufacturers in the aerospace and electronic device verticals, while also working to provide software and support, enabling potential partners and clients to monitor and run large networks of wireless energy.

Funding

With 16 employees, primarily in R&D, the company believes that, upon completion of this Series 1 raise, it will have runway through the first half of 2021, when it hopes to start generating over $6M dollars in annual revenue. During this period, the company plans to continue engaging with high volume manufacturing partners to scale the product while delivering on customer milestones and expanding its IP portfolio.

OurCrowd is working with Upfront Ventures to help finance the company through its current business pivot from mobile phones to the IoT space. The current recapitalization round offers investors the opportunity to finance a deep technology company with $40M of historic capital already injected, but at a $20M pre-money valuation.

Team 

Simon McElrea, CEO – Simon replaced Meredith Perry as CEO at the beginning of 2019.  Before joining uBeam, Simon served as CEO of Semblant, a UK and Silicon Valley based B2B nanotechnology company specializing in the protection of IoT, automotive and consumer electronic devices. Prior to Semblant, Simon was Vice President of IP, Licensing and Marketing at Energous, a wireless-charging company that completed its successful IPO in 2014. Simon has also held a series of technology commercialization leadership roles at Amkor Technology (Nasdaq: AMKR), Honeywell (NYSE: Hon) and Johnson Matthey Electronics (LON: JMAT). An author of over 30 US patents, Simon holds Bachelor’s and Master’s degrees, with honors, in Engineering Science from Oxford University.

Will Kain, CFO - Will Kain, who joined uBeam as a Board Director and CFO in June 2019, has spent the last 12+ years in leadership positions with early-stage energy and water technology companies.  In addition to his duties at uBeam, Will is currently Principal and CFO at Rusheen Capital Management, an early growth-stage private equity firm investing in energy and sustainability technologies. Will started his career with UBS Investment Bank in New York, after earning his BA in Economics and Government from the University of Virginia.