More Money, More QuestionsBy: John Honovich, Published on May 14, 2010
Another month, another significant amount of new funding from dozens of new small investors. Government documents disclose that BRS Labs has raised $4.8 Million from a total of 71 investors (average investment - $67,000). This follows $13 million raised from over 100 investors over the last year. Previous declarations by BRS Labs put their funding between $43 Million and $47 Million. With this most recent investment, total funding may be over $50 Million.
The report for this month's $4.8 Million shows that the minimum investment accepted per investor has dropped from $60,000 to $6,000 now.
Also, not reported previously, but noteworthy is that approximately 8% of investment is paid as sales commission (e.g., $384,017 of the $4.8 Million was used to pay commissions).
New fund raising is generally viewed as a positive sign as it represents confidence of investors in the growth prospects of the company. However, this needs to be counterbalanced by their essentially unique practice in our industry of raising tens of millions from wealthy but non-professional investors. Furthermore, in the video surveillance industry, the relatively small size of the market places a 'natural' ceiling in how large any company can become. How much money is really needed and how much can be returned in a global market that is only about $10 Billion for all of video surveillance divided amongst hundreds of companies?
The more money raised, the more likely the company either implodes from failure to meet high expectations or dominates the entire industry.
In early May 2010, we examined how BRS Labs aggressively but mistakenly jumped up the NY terrorist attempt as validation of their technology.
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