If you’re a coffee lover, spend any time in fancy coffee shops or have a penchant for Kickstarter, you’ve probably stumbled upon Colleague At some point along the way. The nine-year-old hardware startup closed a $30 million funding round, and decided to have a chat with the founder to find out why, after a startup over the course of these many years, the company chose to go the venture capital route.
The company started its life on Kickstarter with Steep Duo coffee Back in 2013, now followed by Icon Stagg . electric kettle In 2016 and poem mill A little later, in 2019. In addition to Kickstarter campaigns, the company launched a range of products for consuming caffeine, including mugs, vacuum storage containers, and more.
The company announced a $30 million Series B funding round led by NextWorld Evergreen. The funding will be used to accelerate product innovation, enhance educational content, expand retail, and hire additional top talent. Also participating in the round were Benchmark’s Peter Fenton and other angel investors.
I spoke to Jake Miller, the company’s founder and CEO, to get more details about what the plan is going for, and how the company got to where it is today.
“Over the years, we’ve learned that achieving our mission to help customers make exceptional coffee at home is more than just designing a great product; it’s also about giving them access to the finest beans and providing them with guidance on how to use those products,” says Miller. “This new funding will allow us to expand what we do and move our brand into this position.”
It’s a market hell that the company is after too. Just last year, Americans spent more than $2 billion on coffee makers and accessories for home brewing and consumed nearly 15 billion cups of coffee. As a result of this pandemic, coffee lovers have doubled down on their efforts to make coffee at home, and there has been a new wave of interest in making coffee that is actually fun at home.
The company raised its first small round of capital in 2014, and claims to have doubled in size every year since then.
“I like to think we had the overnight success that only took nine years. In 2013, none of the institutional investors looked at us. I had a 75 ‘No’. I was walking up and down Sand Hill Road and saying ‘Hey, do you want Invest in a coffee machine, “and basically laughed at, in the most polite way. So we just said, OK, we’ll do it on our own,” Miller explains. We’ve had 100% growth each year for eight consecutive years, and have been profitable for the past five years. So the flywheel really started to spin and we went from two employees to four to 10 to 20 to 30. Today, we have 85 people.”
The CEO explains how the company has already been on a steady trajectory since its $7.6 million(!) angel round at the start of 2021, and 18 months later, it’s ready to go heavy on gas.
“For us, fundraising is just an acceleration of what we’ve actually planned to do. Now, we can do that in the next three years versus the next 10 years,” Miller explains, noting the shift in investors taking over the company. “Hey, that’s real business,” they said. The market and industry has done well: there have been a number of other espresso coffee success stories.”
However, it was not an easy journey. Miller explains that introducing the first Kickstarter campaign cost the company more than it originally thought.
I think there must be something a little bit about entrepreneurs. Jake Miller
“At the time, it was just me, and we sold a $200,000 product. I think it took 15 months to deliver the product to our backers, and it cost $330,000 to deliver a $200,000 Kickstarter campaign,” Miller laughs, shaking his head. The initial financial crisis wasn’t holding him back, but: “The buddy is just the perfect blend of my born-to-create desire. I’m an entrepreneur, and, you know, I think there must be a little something about entrepreneurs; there must be that desire to put yourself in that pain. Pair that with a personal love of coffee and product design. There was another motive as well: I just promised 2,000 backers I’d give them a product. I didn’t want to be the TechCrunch article that says “Companion failed to deliver the coffee maker.”
The fellow is slowly building a reputation for being a company to watch in the coffee space, and he got there with a deep focus on product design.
“For example, we have a second-generation blade set that we originally built in-house,” he says, about the immediate replacement for the company’s soon-to-be-launched Ode range of mills. “It was 23 different sizzle designs before we got to the spur we’re going to shoot.”
Baristas seems to love the brand too, which you’ll notice if you go into profile third wave Café, or watch a coffee tournament.
“I think three or four world champion baristas use the Stagg kettle. That’s our goal: beautifully functional products,” says Miller. Functionally, a lot of that is down to temperature control. It’s the only kettle we know to be solid try yous. A typical boiler has only a mechanical relay that can be turned on and off. With our boiler, when it reaches a distance of seven degrees from the set point, it switches to TRIAC. And then we can do a real modulation of the pulse width. This means we can hold the temperatures more accurately, much closer to the set point.”
With $30 million in the bank, it will be interesting to see where the company plans to expand next. The company’s CEO suggests that it will start pairing up with roasters to offer more subscription type deals (expanding fellow drops program), investing heavily in education to help people make better coffee at home. The company is already doing so in San Francisco, and will soon open a showroom in Venice, California. It is also considering moving some of this educational content online.
I had to ask Miller if I could expect a companion espresso machine next…”I can’t comment on that,” he said with a wry smile.