Money, Money, Money!
We've been trying to piece together the history of Brammo's electric motorcycle venture, in light of the recent acquisition of the electric motorcycle segment by Polaris. Here's what we've come up with.
Startup and Venture Funding: Goal - $30m Funding - $12.5m (+10m)
In September of 2010, Gigaom reported Brammo had raised $12.5 million in an attempt to raise $30 million presumably to launch the Empulse. They also report a $10 million 2008 funding round:
Investors listed on the filing include Kuk Yi, Corporate Vice President and Managing Partner of Best Buy Capital, Brian Wawro, Senior VP at Canadian investment firm Chrysalix and Alpine Inc’s David Kurtz. Brammo raised another $10 million back in 2008.
That would be the startup funding, it seems, with Best Buy as reported in PE Hub.
Series B: Funding - $28m
Next we're showing the biggest chunk of $28 million, with Polaris checking in. The TechCrunch story reports:
The final tranche of Brammo’s second round of investment was led by Polaris Industries and included contributions from existing investor, Alpine Energy, as well as first-time investor NorthPort Investments. Polaris, the manufacturer of snowmobiles, ATVs, and neighborhood electric vehicles, joins the Brammo team as a key strategic partner, providing the electric motorcycle maker with an opportunity to bring its drivetrain technology to new markets.
Tranche, by the way, is the French word for "slice", and is investment-speak for "A piece, portion or slice of a deal or structured financing. ... one of several related securities that are offered at the same time but have different risks, rewards and/or maturities." Your "Series B, C, D..." simply refers to rounds of funding to reach a goal.
Series C: Goal- $45m Funding - $13m
The next round is all Polaris, though there are reports of other undisclosed parties. Via FinSMEs, we get the report that "Brammo Inc., an Ashland, Oregon-based developer of electric vehicle technology and manufacturer of two-wheel electric vehicles, has closed the first $13m tranche of a $45 million Series C funding. The round was led by Polaris Industries, with participation from other undisclosed investors.
Series D: Funding - $9.5m
Here's where the story gets a little sketchy. Via Dow Jone's site VentureWire, we get a rather confusing report that Bramscher, as recently as March '14, is claiming:
... the company had to limit the sales of its motorcycles because of the large battery costs, which have been a limiting factor in the advance of electric vehicles of all stripes.
Brammo used to buy batteries from Valence Technology . That company recently exited bankruptcy proceedings.
"We used from Valence, but they were too expensive and not energy-dense enough," Mr. Bramscher said. "Our ability to produce has been somewhat limited. And now we've been working hard to get the bikes to a profitable level."
This is, at best, a misquote or misinterpretation by the reporter. If not that, it's at least a bit of revisionist history spin, since Brammo hadn't been using Valence batteries since the early days of the Enertia (in fact, our belief is that by the time the Enertia hit the market, Valence had been dumped as a supplier). The Empulse never had Valence batteries, and within it's current production models of 2013 and 2014 were using cells from Farasis, a California supplier of NCM chemistry cells. Assembling these, or any cells into a pack pretty much has to be done by the end-user OEM, in any case. Not to mention that by all reports the demand - or lack of - was what limited the sales... not the battery supply.
The report states the funding came from "... Canadian venture firm Terracap Ventures and Aviva Investors, a major international insurance company" and that Bramscher suggested a $16 million offering.
Debt Financing: Goal - $3m Funding - $3m
Finally, we have what's reported now as "Debt Financing" by way of the EarlyShares crowdfunding site. This was when we started wondering exactly what was happening at Brammo, what with actual press releases announcing the effort, and:
... the launch of a $3 million convertible debt investment offering for Brammo, an electric vehicle technology company seeking to scale the business and execute on international expansion plans.
Brammo Empulse R
We're actually not entirely sure this money was raised, and there seems no confirmation. There are listings where it's pointedly missing.
Yet another statement by Bramscher:
"We decided to host our capital raise on the EarlyShares platform because it gives accredited investors across the U.S. the opportunity to become owners in our game-changing business," said Craig Bramscher, CEO and Chairman at Brammo.
"Hosting our capital raise on an online crowdfunding platform like EarlyShares is a testament to our company's commitment to innovation. As a leading pioneer in its field, EarlyShares embodies our company's commitment to reshaping existing paradigms and engineering creative solutions."
Not the first time the CEO of what is increasingly appearing to be a company in financial trouble has spun their somewhat unconventional efforts as "innovative" and "creative". Remember, this is the guy who tried to sell motorcycles through Best Buy as "rolling electronics products".
Editorial comments aside, there were reports of Polaris being into Brammo for $9 million. It looks more to us like the number is more like $13+ million. The totals we're getting are more in the neighborhood of $76 - 80 million, all told, rather than the $70 million figures we've seen around the internet... but what's a couple six million between friends?
For a succinct recap of where things stood up until October, check out BizJournal Portland's story by Wendy Culverwell, where she reports "In addition to an ownership interest in the company, investors will receive discounts on Brammo purchases, starting with $2,500 off a purchase with a $25,000 investment, rising to a free Empulse model with an investment of $200,000 or more."
One has to wonder. Where did all that money go?
For a complete history of the company, see The Brammo Timeline on The Electric Chronicles.