Knightscope, an autonomous robotics firm that provides “award-winning crime-fighting fully autonomous security robots and offers them on a Machine-as-a-Service (MaaS) business model in the U.S,” is seeking up to $50 million in a Reg A+ offering on StartEngine now.
In 2017, Knightscope raised $20+ million on SeedInvest. At that time this was the largest securities crowdfunding ever for the platform. When Knightscope raised on SeedInvest, shares were sold for $3 each with a minimum $1000 investment. The pre-money valuation was pegged at $80 million. Today, a bit over 2 years later, Knightscope is raising at $8 per share with a pre-money valuation of $310 million – so in a short period of time, Knighscope’s valuation is estimated to have more than tripled.
So what else has changed?
The most recent Offering Circular provides the most amount of information available. According to the document, Knightscope’s revenue has increased by $1.3 million from $1.6 million for the year ended December 31, 2017 to $2.9 million for the year ended December 31, 2018, or by 87%. Knightscope reports 23 different customers as of the end of 2018 with 52 machines in network. That number has probably changed in the last year.
Knightscope states that the company experienced a loss for the year ended December 31, 2018, of $3.3 million compared to $3.1 million for the year prior. We should note that early-stage firms typically generate a loss while scaling operations.
Knightscope depends on a rolling close of this offering to sustain its operations. As of June 30, 2019, Knightscope had cash on hand of approximately $400,000 with projected operating losses and negative cash flows of approximately $1 million per month.
Beyond general operating expenses + SG&A, Knightscope plans to use $15 million of the amount raised (assuming $50 million would be raised or net $46 million) for new machines in network.
Of note, is the stated intention of the company to pursue an initial public offering (IPO).
There have been a handful of other Reg A+ issuers that have pursued IPOs that have not turned out so well. Knightscope is aware of this fact (according to the campaign page) and wants to list on NASDAQ if it is ready.
To quote the offering page:
“Concurrent with this live offering and contingent upon various factors, including raising a sufficient amount of funds and meeting applicable listing standards, the Company plans to begin preparing an S-1 format Form 1-A and Nasdaq Capital Market application in anticipation of a possible public listing of the stock at the conclusion of the Regulation A+ Initial Public Offering. The ticker symbol “KSCP” has been reserved by the Company on Nasdaq.”
The company is interesting as it is pursuing a sector of the robotics industry that is generating growing interest as technology advances. The Offering Circular claims there is limited competition in the robotics industry the company is pursuing. But as with any investment, there is a certain amount of intrinsic risk.
If you are interested in learning more, the offering page is available here.
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