Knightscope Raises $10 Million With $3,320 Average Per Investor

By: John Honovich, Published on Aug 17, 2017

Congrats to Knightscope.

And condolences to their legion of little investors.

Knightscope has disclosed they have raised $10+ million from their SeedInvest fundraising, from 3,000+ investors. Here is the current tally:

That works out to an average of $3,318.23 per investor.

First, the positive:

Great Job Knightscope

Give credit where credit is due, Knightscope has done a great job here.

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Benefit ***, **** ******** *****

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Comments (39)

John Honovich

IPVM | 08/17/17 03:30pm

Knightscope keeps getting investors. Evidently, the SeedInvest ticker is a live tracker and has gone from:

To later this morning:

3 more investors, total raised $3,804, or $1,268 per investor.

Undisclosed #1

In reply to John Honovich | 08/17/17 04:07pm

Don't look now but someone just pulled their $999 out....

Undisclosed #3

In reply to John Honovich | 08/17/17 06:34pm

While your math from the 3 new investors is valid, do you think that this is an overall representation of the majority of Knightscope investors?

If it was, then they'd have only raised $3.87M. (3054 total investors X $1268)

Question:  could an 'early' investor - who already has a financial stake in this company's success - have scooped up $7M in $3 stocks in a bid to use this mini-IPO as a way to gain more control over the company?

 

Undisclosed #2

In reply to Undisclosed #3 | 08/17/17 06:52pm

Question: could an 'early' investor - who already has a financial stake in this company's success - have scooped up $7M in $3 stocks in a bid to use this mini-IPO as a way to gain more control over the company?

First, there is a very large probability that Knightscope is doing this less-efficient fundraising approach because no prior investors wanted to put another $7M into the company.

Second, if someone DID want to put $7M into the company, they could seemingly negotiate much better overall terms than what you get out of this deal (price, lack of preferences, etc.).

Third, what do you think they want to gain control over exactly? Knightscope's massive customer base? Huge revenue stream? Depth of expertise on robotics? What does Knightscope have that you could not get for $7M elsewhere with a better arrangement?

Undisclosed #3

In reply to Undisclosed #2 | 08/17/17 07:05pm

I don't know why someone would want to do that - primarily because I do not know the contracted financial arrangements of any of Knightscope's prior investors - nor do you.

My primary point is that the average per investor is listed in the title of this piece as $3320 (total investment divided by total investors), though the most recent three investors have an average investment of $1268 (same simple math equation).

Because the two are so different, this alone diminishes the validity of the average listed in the title. There is no way to know the breakdown since Knightscope doesn't tell.  Without being able to tell what the actual breakdown is, listing the 'average' has no real value, and further, can lead to false assumptions.

This lead me to wonder if there might be one or more investors who've invested far more than the 'average' in this financing round - and why they might do that.

Undisclosed #2

In reply to Undisclosed #3 | 08/17/17 08:15pm

I don't know why someone would want to do that - primarily because I do not know the contracted financial arrangements of any of Knightscope's prior investors - nor do you.

We do not need to know deep details of prior investments.

You posed a question about someone investing $7M in this round to gain more control of the company. I am asking what would lead a person with $7M to blow to invest this way vs. more conventional methods? What control would they gain? They would not be a majority shareholder. Even if it was coming from Knightscope's biggest single investor, James Sowers.

The $3,320 average investment amount is from a sample set of 3051 people over the entire time this round has been active. You are taking a sample set of the most recent 3. Not the same comparison.

 

Undisclosed #3

In reply to Undisclosed #2 | 08/17/17 10:10pm

"They would not be a majority shareholder. Even if it was coming from Knightscope's biggest single investor, James Sowers."

really?

Per your Sowers link, he has already invested $9.43M as the sole investor in a Series B round last October....which is ~53% of Knightscope's historical funding ($17.76M over 5 rounds).  So he already is the majority shareholder.

B Series are generally used for scaling/growing a proven(?) concept that was funded by Seed and Series A shares... i.e. direction.

Since his majority is numerically slim, he could be hedging his position (using Knightscope's new mini-IPO) to gain more control - with which to more easily control direction.

Mr. Lieberman, commenting below, has surmised a similar position. 

"The $3,320 average investment amount is from a sample set of 3051 people over the entire time this round has been active. You are taking a sample set of the most recent 3. Not the same comparison."

It is exactly the same comparison (total dollars raised divided by total investors) simply using two different data sets - both of which were posted by John.

When both data sets are presented in the same string by the same person, imo it gives the impression that the two are related, when - and you appear to agree with me here - they aren't.

An average of 3 people who invest a total of $3804 - when we know the minimum is $1K - tells a story of mom and pop investors.

An average of 3051 people who invest a total of ~$10.1M - when we still know the minimum is $1K - tells no such story.

Undisclosed #1

In reply to Undisclosed #3 | 08/17/17 10:28pm

Per your Sowers link, he has already invested $9.43M as the sole investor in a Series B round last October....which is ~53% of Knightscope's historical funding ($17.76M over 5 rounds). So he already is the majority shareholder.

Don't confuse how much your investment costs with how many shares you get. 

Earlier rounds of financing are cheaper, and founders keep whatever part of the company they don't need/want to sell.

Therefore, Santana Li is almost certainly the majority shareholder.

Undisclosed #2

In reply to Undisclosed #3 | 08/17/17 10:35pm

Per your Sowers link, he has already invested $9.43M as the sole investor in a Series B round last October....which is ~53% of Knightscope's historical funding ($17.76M over 5 rounds). So he already is the majority shareholder.

No, not even close. Before you try to argue other investor speculation theories you need a better understanding of basic venture investing.

He does not own 53% If he did, he would ALREADY control the company and have little incentive to put more money in to gain more control, especially alongside a bunch of amateur investors that would just be a drag on the company overall.

 

 

Undisclosed #3

In reply to Undisclosed #2 | 08/17/17 11:08pm

"Before you try to argue other investor speculation theories you need a better understanding of basic venture investing."

I have never argued that this is what he did, I originally asked a question and then countered your own comments with possibilities - all of which you have discounted as stupid.

However, if he isn't the majority share holder (which I will grant you and UD1 that he is not, since you schooled me on basic venture investing) then my original question has more validity.

Thank you for helping me make my point.

Undisclosed #2

In reply to Undisclosed #3 | 08/17/17 11:23pm

my original question has more validity.

No, it is still invalid. You are just missing the point.

$7M (or even the full $10M committed so far). Is not buying anyone any "control" over the company.

Your question was this:

Question: could an 'early' investor - who already has a financial stake in this company's success - have scooped up $7M in $3 stocks in a bid to use this mini-IPO as a way to gain more control over the company?

And the answer is "No", they would not gain "more" control of the company. 

On top of that, it is wild speculation at best to think that any prior investors are putting in millions of dollars through this raise. Knightscope is clearly trying to raise money, if someone wanted to give them an additional $7M they would have already taken it, and most likely used that "vote of confidence" to promote this round.

 

David Lieberman

IPVMU Certified | In reply to Undisclosed #2 | 08/17/17 07:14pm

Maybe strategy. U3 asks an interesting question. If the investor thinks there is good potential but the current strategy is an obstacle, could the investor gain control to guide the company to a better future?

Undisclosed #2

08/17/17 04:22pm

Seems like Knightscope ticks a number of these boxes:

Undisclosed #1

In reply to Undisclosed #2 | 08/18/17 01:19am

Found this Robitics specific one:

Undisclosed Manufacturer #4

08/17/17 07:42pm

Michael Farrell may be better off investing his $25K in lottery tickets. 

Undisclosed Manufacturer #5

08/18/17 01:22am

Is Ray Davis involved anywhere with this?

Avatar

Joseph Parker

08/18/17 05:36pm

I wonder how many  Knightscope investors have Iraqi dinar sitting in a safe somewhere?

John Honovich

IPVM | 08/18/17 05:44pm

Update In the last 30 hours, $89k new investment from 25 new investors, ~$3,560 average.

It will be interesting to see what pace they can maintain.

Undisclosed #1

In reply to John Honovich | 08/18/17 09:01pm

Since the number can also go down, does that mean that one can still back out?  

How do we know this money is really committed then and not pump priming?

John Honovich

IPVM | In reply to Undisclosed #1 | 08/18/17 09:11pm

How do we know this money is really committed then and not pump priming?

I do not know enough to comment definitively. I did check the FAQ and this appears relevant:

If I understand that correctly, it would be possible to de-commit, however given that it shows so many individual small investments, that signals legitimacy to me.

Btw, SeedInvest may clean up on Knightscope:

7.5% placement fee; charged on the total amount raised on SeedInvest in the round

Plus:

SeedInvest charges a 2% non-refundable processing fee (up to US $300) per investment.

Given that, SeedInvest is on pace to take $1+ million from the Knightscope fundraising.

Undisclosed #1

08/18/17 09:27pm

In July 2017, they had another social media sensation when one of their robots 'drowned'. While many mocked them, the upside was that literally millions found out about Knightscope.

Perhaps this 'drowning' was an inside job; the plan hatched after seeing the significant reaction to their robot being attacked by the drunk weeks before.

Unlike that case, no one was arrested, and no one outside of a small few at Knightscope would even have to know the plan.

Just command it to take a dive, and let social media do the rest.

They were quite quick to mock themselves.  Very quick :)

 

Undisclosed #6

08/21/17 05:29pm

You should post the sec filing 1k 2016 - salaries against losses last year of over 5MM. 

The executive team is being paid like they are working a facebook and the CEO and his WIFE VP software engineering are draining money out of the company while the investors are clueless.

 

"Although the Company has commenced planned principal operations, it has not generated meaningful revenues or profits since inception through December 31, 2016 and has sustained net losses of $5,472,547 and $3,392,277 for the years ended December 31, 2016 and 2015, respectively. Although these factors, among others, could raise substantial doubt about the ability of the Company to continue as a going concern within one year after the date that the financial statements are issued, the Company has secured approximately $1 million in total contract value in 2017 alone and has conducted numerous closings in its ongoing Series m Preferred Stock Offering, relieving the risk of a going concern issue during the aforementioned period of time."

 

 

John Honovich

IPVM | 08/25/17 12:11pm

Update: One week later, Knightscope has added 200 new investors and just over $500,000 of investment. Now at:

That works out to just over $2,500 per investor for the week.

While the amount of investment per investor is fairly meager, that they got 200 new investors in a week is definitely a strong sign of the success (for them) of selling shares over the Internet.

Undisclosed Manufacturer #5

In reply to John Honovich | 08/25/17 12:14pm

That must be one really cool shirt!

Undisclosed Manufacturer #5

08/27/17 06:18am

This could really be the future of security!

New Guards?

Undisclosed #1

In reply to Undisclosed Manufacturer #5 | 08/27/17 06:26am

If the robot views its own video stream on the monitor, another KS unit will be toast!

 

Undisclosed #6

09/01/17 11:20pm

DON'T WANT TO MISS OUT ON THE LIMITED QUANTITY AUTOGRAPHED TEE SHIRT!

John Honovich

IPVM | In reply to Undisclosed #6 | 09/02/17 12:24pm

Weird to call it last chance when there is still 38 days left.

On the positive side, in the last 8 days, they raised another $600,000+ at a similar ~$2,550 per investor average investment. Still lots of small investments but a lot of them.

Undisclosed #6

09/05/17 01:35am

I'm wondering if any of those investors have asked last 12 months churn rate?  

Undisclosed #2

In reply to Undisclosed #6 | 09/05/17 01:59am

I would wager that many of those investors do not even know what churn in, much less to ask about it.

 

Undisclosed #1

In reply to Undisclosed #6 | 09/05/17 03:31am

I'm wondering if any of those investors have asked last 12 months churn rate?

I'm not sure churn rate is statistically useful when you only have 9 customers ;)

Undisclosed #1

09/05/17 03:37am

Warning to anyone still on the fence, get in now before the issue is oversubscribed*

*I'm joking about the 'get in now' part.

John Honovich

IPVM | In reply to Undisclosed #1 | 09/05/17 11:40am

There's a 'chance' that they hit $20 million, but based on their ongoing rate, not a very high one. They need ~$8.5 million in ~36 days, which is ~$240,000 per day or ~$1.7 million a week, while recently they have been averaging less than 40% of that rate (0.5 to 0.6 million weekly).

Even if they don't get to $20 million, and it's just $13 or $14 million that is still a great success for them, given the terms extended and their overall condition.

Undisclosed #1

In reply to John Honovich | 09/05/17 02:27pm

Li's answer, (even if the question is legit), looks like another "Act Now, supplies limited!" message.

And either the question comes from a shill, or Li saw fit to disregard a (potential?) investor's actual query, and 'frankly' speak about a less likely scenario.

 

Undisclosed #6

09/08/17 11:13pm

The tech giants of Silicon Valley are starting to rely on crime-fighting robots for security

I heard Microsoft, Uber and Juniper Networks have all canceled and they are in danger of losing a bunch of other accounts.... can anyone confirm this?

Undisclosed #6

09/08/17 11:14pm

I actually heard they haven't been able to renew a single contract.

Undisclosed #6

09/10/17 07:46pm

What this company puts out in its offering documents and the enormous amount of paid press and awards (fake news) - is so inconsistent with reality.  Totally misleading the uneducated public investing in the mini - ipo.   

John Honovich

IPVM | 09/22/17 12:10pm

Update: Knightscope now reports $15+ million funding raised from SeedInvest. Given their previous fund raising here, someone or a handful of people invested very large amounts.

For the first $11 million or so, average investment amount per investor was ~$3,300. For the last $4 million, that surged to $7,000. My best guess is that they continued to get a flow of smaller investors putting in $1,000 to $3,000 but they got one or a handful of $100,000+ (or larger) investments.

That's quite a bet, to say the least.

Undisclosed #1

09/23/17 08:58am

Tatooine inspired ad, with the iconic binary star system upgraded to a septenary one.

"These are not the droids you're looking for."

 

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