Halifax’s Snorble has raised US$10 million or C$12.3 million from a single investor, New Jersey-based GK Venture Partners, valuing the company at US$40 million or C$50.1 million.
The deal, which CEO Mike Rizkalla said in an interview is effectively Snorble’s Series A funding round, comes on the heels of a $2 million raise that closed in January. GK is Snorble’s second institutional investor after consumer tech venture capital fund Legendary Ventures.
Rizkalla’s brainchild, Snorble is a robot that children are meant to experience as a toy, but which actually uses artificial intelligence, voice recognition and interactive prompts to encourage healthy bedtime habits from kids, like brushing their teeth or going to bed on time.
“It wasn’t what we were trying to do,” said Rizkalla of the raise. “This opportunity came to us at the right time.
“And because these folks are really wonderful, and they really understood the value that we’re creating from a vision perspective … we gave them a better deal than we had intended to for the A-round.”
GK originally approached Snorble during the previous, $2 million raise and asked to participate, but repeatedly expanded the scope of its potential investment. Partners from the firm offered to buy in immediately after being pitched, then offered to purchase more shares than originally planned, before finally asking to buy 30 percent of the company.
They did not get their 30 percent, but they did get 25 percent for the $10 million, making GK Snorble’s largest non-founding shareholder.
“As an entrepreneur, you’re sitting there going, ‘What just happened?'" Rizkalla said. “But they had a real appetite for this.”
He added that despite GK’s abnormally large stake in the company, control of the business will remain with the board and C-suite. And Rizkalla expects to eventually onboard other institutional investors.
“Governance, culture and (employee) retention were all top of mind,” said Rizkalla. “Because it’s still pretty early, right? There is a fear that a partner will come in and trample all over what you’re doing before you get a chance to get started.
“Not these guys … they didn’t try to put extreme control measures in place."
Snorble is taking pre-orders for the toy itself, which is slated to ship in June, 2022 at a $299 price point. Much of the early work Rizkalla’s team did on the device was funded via a spring, 2021 Indiegogo campaign that started with a goal of raising US$25,000, but ultimately bagged US$208,000.
The company so-far has 20 employees — including recently appointed Chief Technology Officer Steve Hecker, who was previously engineering and manufacturing lead and has spent decades building consumer products. The company also has a roster of contract workers and employees at partner businesses that bring the total number of people working on Snorble to between 60 and 80.
Fourteen of the 20 staff live in Nova Scotia, and Rizkalla said he is looking to hire more software engineers. Snorble’s LinkedIn page lists an opening for a Senior Quality Assurance Manager with at least eight years of manufacturing experience and a bachelor’s degree in mechanical, electrical or systems engineering.