When you have a solid business idea, you sometime need to turn to multiple sources of funding to transform it into a going concern. For the founders of one California business, this even meant pitching their product on reality TV.
“We’ve used pretty much every kind of business financing available,” says Adam Pettler, cofounder of Revolights. The startup, which launched its first prototype in the fall of 2010, has raised close to $2 million to develop and produce a bike lighting system that uses LEDs timed to the rotation of the wheels to create better road lighting and greater visibility.
Cofounder Kent Frankovich (pictured, with Pettler) drew on his background as a mechanical engineer (he worked on the Mars rover at NASA’s Jet Propulsion Laboratory) to conceive of and design the lights.
Kicking into Gear
Revolights’ first funding source was a Kickstarter campaign in 2011. With a goal of $48,000, the crowdfunding appeal raised a whopping $215,000. Feedback from customers was as valuable as the cash. “They are an incredibly engaged community,” says Pettler of Revolights’ early customers.
The founders quickly realized that the money was not going to cover startup costs and manufacturing. “The Kickstarter (funding) essentially paid for the product that was ordered, which we didn’t have yet,” says Pettler. So they took out a $250,000 SBA loan to get them through their first production run.
In early 2013, they secured a convertible note. “It was to fund that production and get us inventory so we could potentially sell past our Kickstarter units. We knew that to survive we had to start ramping up sales,” said Frankovich. “We were very pragmatic.” Having a great idea was not enough – success would hinge on their ability to sell their product.
Swimming with TV Sharks
More recently, the partners decided to try their luck on the reality show Shark Tank. They realized there was a risk: “This could be great for Revolights but for whoever goes on the show, it could be pretty terrible,” says Frankovich. Pettler adds that because of the harsh way reality TV can sometimes portray people, “you could be a fool, you could be a villain, you could be a hero.” Frankovich decided to take the risk of stepping onto reality TV because, “good or bad for the person, it could only be good for the company.”
Appearing on the show turned out to be good for both the business and for Frankovich, who held his own with the “sharks,” as the show’s investors are called. Revolights accepted an offer of $300,000 — twice the company’s initial ask — for a 10 percent stake from well-known entrepreneur Robert Herjavec.
Not all of their funding bids worked out. A subsequent Kickstarter for a new product with a lower price point, timed to run during the airing of Shark Tank, fell $22,000 short of its ambitious $100,000 goal and failed to fund.
However, the Shark Tank appearance has opened doors for the fledgling company. Major retailers called, asking to carry their product. Retail sales have jumped. Frankovich reports that connections are easier to make, both because they now have access to Herjavec’s network and because of increased recognition from Shark Tank’s 7.6 million viewers. “How often does it happen that someone has already seen your pitch before you even talk to them?” Frankovich asks.
Series A Funding Seals the Deal
Most recently, Revolights was able to complete a Series A round of venture capital funding earlier this year with help from Herjavec. “The goal now is to really expand the team, to grow sales and marketing,” says Pettler of the $1 million round. “It becomes more than just production.”
The cofounders have been able to hire four new employees, bringing their staff up to nine. These days, Frankovich uses a 3D printer to create prototypes of his new designs.
“If you really believe in something that you have, there’s no reason you shouldn’t go for it,” says Frankovich. “Sink or swim, you’re going to learn an incredible amount.” Right now, this small business is definitely swimming.