PicoBrew, the Seattle startup that has sought to revolutionize the way people brew beer and more at home, is looking for a buyer for its business built around high-tech appliances.
Co-founder and CEO Bill Mitchell said Friday that PicoBrew has entered into receivership after the company failed to secure new funding from investors.
Mitchell told GeekWire that PicoBrew has been operating on bridge financing while seeking additional investment, but the bridge lending group, which offered an extension from June 2019 to mid-December, has told the company that “time is up.” Mitchell said funding will continue while PicoBrew looks for a buyer. The news was first reported by The Spoon.
“We’ve got a lot of technology that customers would enjoy and benefit from and we’d love to get it in their hands,” Mitchell said in defending the diversity of PicoBrew’s product portfolio against claims that it may have hindered investor interest. Mitchell said there was a difference of opinion among existing investors about the company’s strategic direction.
The saga is reminiscent of another Seattle hardware startup’s search for a buyer at the end of last year, when high-tech football helmet maker Vicis ran out of funds, laid off its staff and also entered into receivership.
A former Microsoft vice president, Mitchell had been a home beer brewer for about 10 years when he seized the chance to bring hardware and software into a space that he was passionate about. Along with his brother, Jim Mitchell, a food scientist with years of experience in the field of food processing technology, and Avi Geiger, a hardware engineer and architect who also put in years at Microsoft, Mitchell started PicoBrew in 2010.
“We can do for the industry what super automatic espresso makers did for making really good coffee drinks at home,” Mitchell said in 2016. “And we can bring the joy and the pleasure and the quality of home brewing to everyone.”
Over the years, PicoBrew, which raised more than $15 million, expanded its product greatly, and the business is about more than just a singular appliance for making beer. The company offers three beer-brewing appliances; a marketplace for buying brewing kits and accessories; a PicoStill for crafting spirits; an intelligent fermentation device called PicoFerm; and plans for what they call MultiBrew, a coffee-making “Keurig-killer.”
“We are a venture company and it’s in our DNA to keep creating more and better assets and businesses,” Mitchell said. “The three founders are all inventors, so it’s hard for us not to keep inventing, patenting and creating new products. We do need to get better at hiring people/partnering with people to sell or license the innovation we keep creating though.”
While trying to raise the Series C funding, Mitchell had discussions with what he called “some of the biggest food and beverage companies in the world” and “very very smart people” who he personally would be excited to work with.
While a high valuation would provide the best possible outcome for PicoBrew’s stakeholders, Mitchell also thinks a strategic partner-owner could give PicoBrew the leverage it needs to scale up the many inventions and multiple businesses they’ve created over 10 years.
Over the past two years, employee count has been reduced to less than 40 from a peak of more than 80. While there are no specific plans for additional reductions, Mitchell said a buyer may decide to focus more or less on various parts of the business and therefore impact staffing numbers.
For customers, it’s business as usual, for now, but it remains to be seen whether new products materialize. PicoBrew has a dozen patents and a dozen more pending, according to Mitchell, and they’d love to move forward on the devices and prototypes they have in the works.
Mitchell also owns a number of important lessons from dealing in hardware and original invention, which he still prefers over what he calls the “derivative” nature of tech that is an overnight success. Hardware takes time and it takes multiple funding rounds with ironclad investor commitment.
“As Dan Leviton of [VC firm] Maveron counseled me a couple of years back: ‘Startups only fail for one of two reasons — they run out of heart, or they run out of money,’” Mitchell said. “Make sure you have an ample supply of both going into hardware ventures because you’ll need them!”