DEAL DETAILS
Startup: Blendid
Security type: Crowd note
Valuation (cap): $50 million
Discount rate: 20% or 25%
Minimum investment: $100
Where to invest: MicroVentures
Deadline: June 7, 2021
Conversion provisions: Conversion Provisions: In connection with equity financing of at least $1 million, the Company has the option to convert the Crowd Note into non-voting preferred stock (Conversion Shares) at a price based on the lower of (A) a 20% discount (or 25% discount) to the price per share for Preferred Stock by investors in the Qualified Equity Financing or (B) the price per share paid on a $50 million valuation cap. Please refer to the Crowd Note for a complete description of the terms of the Crowd Note, including the conversion provisions.
Vipin Jain and I are both Trekkies. It’s why I dream of flying cars (no secret to my readers!). He dreams of food replicators. I’m still waiting. But not Vipin. His dream has come true. But only because he cheated. He created something similar to a replicator himself… with some help from a couple of colleagues.
It’s causing a lot of excitement. A couple of large companies that want their customers to try out these amazing machines have signed agreements with Vipin’s startup Blendid. One is Walmart. The other is Jamba Juice (announced just last week!).
When I met Vipin a few months ago, I had never heard of Blendid or the company’s robotic smoothie kiosks — even though they were delighting crowds at three different locations in the San Francisco area. People were flocking to see the robot in action and try out the smoothies it made. Both the viewings and smoothies were hits. The machine’s articulated arm moves so fast, the human eye can’t keep up. It can make up to 45 smoothies in a single hour including clean up. And they’re delicious.
Being on the east coast, this was all news to me. Vipin brought me up to speed quickly — including his intention to raise more money. He had already raised $13.5 million from VC firms. And now he’s raising again on MicroVentures.
That’s great news for you.
Robotics is a tricky space. The industry is still in its infancy. The technology is expensive. Companies are still figuring out how to make it both useful and affordable. Product market fit isn’t easy. And the food industry is no exception. Robotic food makers are the new toys. They’re fascinating. They’re fun to watch. None have taken off so far.
But Blendid can.
A New and Amazing Multitasking Machine
There’s never been a food robot quite like Blendid. Its smoothies can be a standard menu selection or made-to-order — using nutrient-rich fruits, vegetables, seeds and superfoods.
These machines never make a mistake. They precisely follow their recipes down to the letter. And they’re “pandemic friendly.” Not a single human hand touches the ingredients, the glass it comes in or your credit card or wallet. You order from your phone — it’s completely contactless.
Blendid’s machine is the product of technological advances in robotics, machine vision and AI. The current kiosk system features a three-station blender setup, a UR3e robot, two delivery robots, lots of ingredient dispensers and built-in HD displays to show menu options, promotions, pricing and the real time status of orders.
For operators, the kiosk features applications and dashboards to notify them of the need to restock ingredients, alert them (via text and email) about service incidents and display various data and analytics reports.
The technology is amazing. But it’s only going to get better and faster over time. As I write this, Vipin is making plans to upgrade the system’s productivity and versatility. One improvement in the works is to make drinks from a choice of eight liquid bases, as opposed to the four it does now.
An Outstanding Risk-Reward Profile
Amazing technology isn’t enough to justify investing in any startup though. The key is making sure the advantages and efficiencies any new technology creates outweigh the costs. Which is tricky since robotics are expensive. Let’s do a quick run-through of my M/P4 criteria — Margins, Product efficacy, Product demand, Pre-inflection point and future Pathway — to delve a little deeper into Blendid’s potential.
M: Margins that facilitate profitability. Ready for some math? A well-located Blendid station should generate about 1,000 orders a week with an average order of $6. Weekly sales of $6,000 times 52 weeks comes to annual gross sales of $312,000. The company expects a 50% (or higher) operating margin at that volume. The operator takes 30% — Blendid takes 20%. The robot itself costs $100,000. That means breakeven is reached in 13 months.
Now that’s almost too good to be true. Typically, a smoothie franchise operator has to endure four years of losses before revenues catch up to upfront costs. Blendid blows that out of the water by having a reasonable price tag to start with and operating margins that are three times the industry average. And operators actually save even more when you take into account avoiding employee churn and training.
P1: A product that works. That is, works as advertised — which is not a sure thing in the robotics space. And Blendid’s machine definitely works as advertised. It’s been installed and operating for up to a year in different settings. It’s in two universities and a tech center. And since October, its most important test is the Walmart setup where it’s been operating without a hitch. It has served 40,000 smoothies. The machine is proven. And like a lot of products, it will improve over time. Vipin says it’s only a matter of time before it makes a vast array of food and drink dishes, from soup to salads to bowls. But for now, it does exactly what it’s supposed to do.
P2: A product that meets a big need. Consumers want better, safer and more convenient food options. They increasingly value sustainability, health and freshness. Operators want to satisfy these needs while still making enough profit to grow and prosper. Restaurants are used to dealing with historically razor-thin profit margins. But they got even thinner with the arrival of COVID-19. Between March and the end of May 2020, the restaurant sector lost $120 billion in sales, according to the National Restaurant Association. Those thin margins may improve a bit post-pandemic. But they’re not going away. Blendid offers a way out. It gives consumers increased convenience and freshness. And it puts more money into the pockets of operators.
P3: Pre-inflection point. Blendid’s robotic food stations create a new paradigm/business model that helps solve the biggest challenges of the industry. Now, we’re not quite at a full-blown inflection point yet. That happens when Walmart and Jamba Juice make good on their intentions to install dozens of Blendid’s robots. But I’m happy with being at the pre-inflection point this time around. If we were at the true inflection point, Blendid would be at a $100 million valuation. Because the inflection point hasn’t been reached yet, people can invest in Blendid at its current — and much more reasonable — $50 million valuation. Yes there’s more risk. But the potential rewards are significantly higher. I like where Blendid is now — on the verge of transforming the restaurant business with robotics.
P4: A pathway to rapid growth and a high valuation. Walmart and Jamba Juice want to see the numbers work in real time before committing to a large-scale adoption of Blendid robots. There’s some risk there… it may not work out. But consider this. Jamba Juice has 864 locations. Walmart has more than 5,000 stores in the US alone. Together they represent a huge opportunity for expansion and a path to growth that could culminate in unicorn status.
Blendid Is On Its Way
As I said, I like where Blendid is right now. Walmart and Jamba Juice don’t enter into these kinds of collaborations without a great deal of thought and research. They obviously like what they see — and if Blendid’s food robot performs like they expect, Blendid will be well on its way. And your investment will make you a great deal of money.
Smoothies and juices alone are a huge market opportunity. Look at Smoothie King — its revenues are over $400 million. At a conservative 5X multiple, it’s worth $2 billion.
Of course, Blendid is aiming to do more than just smoothies and juices — as it should. The global food robotics market is projected to double in just five and a half years. Blendid plans on riding that growth by expanding its food choices and extending licenses to global and overseas regional food service operators.
Blendid is building a war chest to do this. Its current raise is part of that process. This is a bridge round. It will raise much more in its next round — which will be a Series B round at a significantly higher valuation if things go according to plan.
What does that actually mean for you? If its Series B valuation goes up to $70 million, for example, your price is capped at $50 million. But if it stays at $50 million, you’ll get a 20% (or 25% early bird) discount. If it goes up to $60 million, you’ll still get a 20% (or 25% early bird) discount because paying at the capped $50 million only gives you a 16.6% discount. And you automatically qualify for the higher discount available to you.
You’ll be investing in a company that aims to achieve profitability as soon as 2022. You’ll also be investing in a seasoned leadership team led by co-founder, CEO and Trekkie Vipin Jain. Vipin cofounded and headed Retrevo, which was acquired by Barnes and Noble. Vipin led the sales and strategic partnerships for its NOOK product. Along with his two deeply experienced co-founders, they have more than enough business and technical acumen to drive Blendid’s growth strategy.
How to Invest
This deal is being hosted on MicroVentures, a licensed broker and dealer. The first step — if you don’t have a MicroVentures account yet — is to go to the MicroVentures site and sign up for one. Once you’re registered, go to the Blendid page. Click on the orange “Invest” button. You can invest $100 or more.
Risks
Blendid is an early-stage tech investment and, like all such investments, is risky. Do not invest money you can’t afford to lose. Also, remember that these types of investments are not liquid, meaning you can’t buy or sell your stake easily. If and when an exit opportunity arises, you’ll be informed immediately.