With $79 million Series D round, Quirky is New York's most underrated (yet well-funded) startup
Quirky might be the most underrated startup in New York. The crowdfunding hardware company's CEO Ben Kaufman says he purposely keeps a low profile in the New York tech scene. He rarely speaks at conferences or makes appearances at the requisite parties. The company, based in a warehouse way over on the West side, doesn't court much press from the tech blogosphere. Kaufman is not on those lists of Important New York Tech Companies and many in the scene don't even realize Quirky is a based here.
By that argument, the company might be underrated. But to be sure, Quirky is not underfunded. Prior to today, Quirky had raised $91.3 million in venture funding in its three short years of existence.
Today the company adds even more cash to its coffers. The company just raised an eye-popping $79 million Series D round of financing, $30 million of which comes from GE Ventures. Existing investors Andreessen Horowitz (where, disclosure, three partners are PandoDaily investors), Norwest Venture Partners, RRE Ventures and Kleiner Perkins Caulfield & Byers participated.
GE is a strategic investor; the capital comes with the explicit plan to co-develop and launch 30 new connected device products, which will be co-branded "Wink: Instantly Connected."
The deal includes also includes "in-kind services" from GE, which consists of three things: The first is promotional campaigns and advertising of the products the companies build together. Second, Quirky will have access to GE's intellectual property, its quality assurance assets and manufacturing assets. Last, GE will provide Quirky with ideas from its technical team, which make more sense to be developed through Quirky's platform than GE's product development process, according to GE SVP and CMO Beth Comstock.
With that much capital in the bank, Quirky has a lot of work to do. Compared with its massive pile of VC money, the company's revenue is small: Last year Quirky did $18 million in revenue. The company's Chief Revenue Officer recently left the company.
But Quirky is increasing sales quickly. Kaufman says the company plans to triple that revenue figure this year -- equating to $54 million -- and do "well over" $100 million in sales next year.
Kaufman has noted in the past that Quirky hasn't been able to seize big opportunities because of its lack of funds. Quirky's crowdfunded inventions are now for sale in 35,000 stores, including Home Depot and Best Buy.
The company has developed 130 mass market consumer products with its crowdsourced design platform. The most famous is Pivot Power, which Kaufman says makes up less than a quarter of Quirky's revenue. "Even things like rubber bands with a hook on them wind up selling tens of thousands of units," he says.
On the investment side, GE Ventures is a very active firm. The company made 60 investments over the last 18 months, but most of them are in the energy and healthcare industries. GE has acquired portfolio companies in the past, Comstock says, but that's not always the intention of doing a deal. "The idea is, if you're a startup, you'd want to work with us for more than just access to money," she says. "The ability to have technical and commercial collaborations as a startup scales is valuable, and they've seen that playing out with Quirky," she says.
The partnership resulted in four products: the Egg Minder, Nimbus, Pivot Power Genius (a version of the popular Pivot Power product), and Spotter. They hit stores last week and have already sold thousands of units, Kaufman says. This connected home partnership will help GE move carefully into a category that it isn't strong in -- small household products -- while giving Quirky access to resources and experience that comes with a behemoth consumer appliance company.
"Our hypothesis was that the connected home space was taking off," Comstock says. "We had a hunch ... and saw them starting to scale up. We had a hunch they could help us in the connected home space and we were very intrigued about the community dynamic (of Quirky)."
[Image via Quirky]