Update: Artly has raised more than $518,000 as of Thursday morning.
Seattle-based coffee robot barista startup Artly started trending on StartEngine after it raised more than $340,000 within just a week of launching an equity crowdfunding campaign at a $100 million valuation.
StartEngine opens the door for non-accredited investors to buy equity in early-stage startups. The company operates under laws introduced in 2016 that permit regulation crowdfunding, a framework that gives small businesses and startups the opportunity to raise capital by selling shares of their company to the public through online platforms.
Artly CEO and co-founder Meng Wang said Artly was not actively fundraising when StartEngine contacted the company. He said seeing other food robotics startups raise cash via crowdfunding influenced the decision to launch a campaign.
Wang said Artly’s customers have expressed interest in investing, noting that the crowdfunding approach allows them to become early backers. He said Artly is especially drawn to crowdfunding due to its identity as a consumer-focused tech startup.
“If Artly is developing a product for the people, it makes sense to let the people be owners from the beginning as it is developed,” Wang said. “The vision and commitment to serve the people align with crowdfunding’s principles.”
Artly has previously raised $10 million from venture capital firms SV Tech Ventures, Amino Capital, LDV Partners, Aimtop Ventures, and others.
“The response from existing venture capital investors to Artly’s decision to go the crowdfunding route has been mostly supportive, despite some initial resistance due to the novelty of regulation crowdfunding,” Wang said.
Wang said the decision to opt for crowdfunding wasn’t “primarily driven” by the recent downturn in the venture capital market.
Artly’s campaign, which expires Nov. 7, set a goal of raising $1.23 million. It plans to sell 130,000 shares and investors must commit at least $492.96 to participate.
Prior to the JOBS Act in 2012, startups could not raise equity from non-accredited investors. The goal behind the bill was to democratize venture capital investing, allowing ordinary Americans to invest in early-stage companies.
It took four years for the bill to become law. The Securities and Exchange Commission set a number of safeguards: startups must use SEC-approved platforms, raise a max of $5 million yearly, cap non-accredited investors’ ownership stake, and reveal financial details.
Equity crowdfunding got off to a sluggish start. However, it has gained momentum, with StartEngine alone reporting more than $189 million raised on its platform in 2022.
Artly joins a growing crop of consumer-facing Seattle entrepreneurs that have tried their hand at equity crowdfunding over the last year:
- Women-led distillery company American-Made Amaro landed nearly $140,000 in September.
- Jane Park’s sustainable gift-wrap company Tokki nabbed nearly $200,000 in November.
- Eco-focused real estate developer Green Canopy Node snagged more than $169,000 earlier this year.
Founded in 2020, Artly sells an artificial intelligence-based device that it claims makes a “perfect cup of coffee every time.” It uses computer vision algorithms to guide a robotic arm and monitor drink quality. The company has 10 retail locations across the West Coast and New York.
Artly’s decision to opt for crowdfunding offers a rare view into its finances, thanks to mandatory filing rules.
Artly reported net revenue of $911,907 in its fiscal year ended Dec. 31, up from $109,257 the year prior. Net loss rose to more than $2 million, up from $596,059 in 2021.
The 3-year-old company says its valuation is just under $100 million. That’s up from $45 million when the startup raised $8.3 million in a “pre-Series A round” last year.
The new funding will be used for R&D and inventory, according to filings.
Artly categorizes its business model into two segments: “Artly Coffee” and “Artly AI.”
Artly Coffee is the chain of coffee shops it operates, while Artly AI generates revenue by renting out robotic arms to other companies through a “robot-as-a-service” model.
Artly competes with large coffee franchises including Starbucks and Peet’s coffee, as well as robotics and AI companies such as Boston Dynamics.
Another food robotics company, Miso Robotics, also raised cash via equity crowdfunding, pulling in more than $60 million.
Some investors who bought Miso shares recently posted on the company’s discussion board, asking why the current share price being offered is lower.
Miso issued the same response to multiple queries, citing the impact of high inflation, macroeconomic headwinds, and rising interest rates on valuations. “Miso Robotics was not immune to this market-wide phenomenon, and it faced similar challenges regarding valuations,” the company wrote. It also cited a new valuation as a result of a recent investment from Ecolab.
Wang said macroeconomic factors including higher interest rates don’t significantly impact Artly. He points to a number of tailwinds: increased demand for specialty coffees, contactless service due to post-pandemic changes, growing adoption of automation and AI, and rising labor costs.
