Business Update - Info & FAQ
If you haven’t read it first - please see our Raine Business Update here.
5th June 2021 Update
Hi everyone,
Thank you for all your support with the news of our hibernation and work to relaunch, and many positive understanding comments and messages.
To those who have provided negative feedback or are implying anything else, we assure you we are a team of real and dedicated people solving this. We are a startup company with full time employees and have tried to be open and fair to everyone involved. We sincerely hope that our company can stay liquid until manufacturing conditions and costs return or we adapt to suit, and that is the plan we are on.
Given some of the reactions and comments we saw, including many positive understanding comments and messages (thank you!), and negative comments - we would like to clear a few things up.
We did not take recent investor funds from a raise and run away with them. The opposite, in fact. We requested funds to be returned before they were sent to us as soon as we saw the supply conditions change. It was the highly responsible thing to do.
What happened?
Huge cost and supply changes. Saturday last weekend May 29th, after pushing for some time to receive real numbers and facts on rumoured price increases from suppliers and final build purchase orders, we finally received an updated price table.
It was not good news. Even more so because we had little time to respond. Worked all day and night on Sunday to roll the increase into our financial calculations. And looked at it very hard. Tried to solve it with small pieces, many changes and many creative thoughts. It was just not possible.
The number came out at a $580,000 AUD increase [+$448,000 USD]. The largest change we have ever seen in our financial calculations. Previous ones, we had adapted to. This time it was the biggest single cost and expenses increase we had ever seen. And we heard that electronics parts supply has changed from confident to not guaranteed.
Decisions. If we cannot be successful in the short term to deliver product soonest and ship it, what do we do?
We are a startup company. Limited budget. Large dedication.
We adapt. We improve. We work the problem. Whether it knocks us down, or up.
The right thing to do was adjust, change and survive to be there to deliver after this challenge.
And move fast.
We notified the fundraising platform right away, on Sunday May 30th to pause all settlement of the recent raise, and be prepared to return it to investors. We would not responsibly accept investor funds if the company had just seen new market conditions which severely impact the ability to execute on the plans for the capital raise. We also prepared to refund the direct website pre-orders given this change in conditions.
To be clear, the Kickstarter project was run at the end of 2019, and we had a high chance of success. Nobody knew that COVID was coming. Country shutdowns, factory shutdowns and unexpected changes. And today a peak of cost increases and supply shortages that have not been seen in the industry for a long time. Fine if you are a huge company with influence and lots of extra cash. Not fine if you are a startup with limited influence.
All of this week we have been talking to all of our investors, some great advisors and more opportunities to see if a fast solution of extra funds or creative solutions came in.
Are we closing down now? No.
We want to be here to deliver.
If nobody attacks the company or its people, we have an active company with small modest funds in the future to reset from, and some good resources and opportunities. We understand that some project backers in the Kickstarter community are upset. We feel it too.
We plan to be here and actively able to relaunch and as advised in the previous update, deliver a Kickstarter reward when that relaunch happens.
Thank you,
Team Raine
You can reach us on hello@raine.co
FAQ:
Why was this fast / such a surprise?
We received information last Saturday 29th May.
Can we rebuild and adapt?
Yes.
Have we completely run out of money?
No. Though small in funds in this pathway, if we “hibernate” temporarily while continuing to work unpaid in the background, we have a path toward delivery, relaunch and rewards.
Can we refund all Kickstarter project backers ‘right now’?
No. We have made use of Kickstarter funds exactly as you would expect to, to the completion of the project and fulfilment, while putting all of our own funds in, and time in through these challenges, also.
Are there risks?
Yes. The current market conditions on supply, costs, and freight are all challenging.
Can we get 100% of the parts, during this shortage?
Maybe. We wish it was guaranteed. It seems more guaranteed for large companies with buying power and extra cash to pay at any cost to get some parts. The factory is running spot buys and spreadsheets tracking price and supply every few days.
Why did I receive an address update request for shipping in the last few days?
Since the information came on the weekend and management spent a few days completely on solutions, the (great) team member confirming address details did not know until Thursday when we knew the pathway.
Have we all been paid and run away with the money?
No. We haven't 'run away' with anything. In fact for all of last year - out of 6 members, we had only 2 staff members paid at all, receiving modest pay. One of the founders, Marc, and some investors have put in their own personal funds to invest in the business while also being unpaid last year, and before then. We believe in it.
Why didn’t we “buy everything” as all parts last year and have it now?
Usually that is not advised practice, almost all factories buy within the lead times and conditions so as not to have old stock, or adapt to the complete bill of materials that become certified in pre-production testing. Of course many companies are now wishing they bought everything last year, before this challenging supply period and parts cost increases.
What is with these parts shortages?
The recent article in the Australian Financial Review (here) talks about the component price surge and unfortunately we have been caught in a similar situation with manufacturing partners in China. This has made it impossible to continue with the immediate production at this stage. We are working the problem toward lower costing, and allowing more time now.
Why is the private Facebook group deleted?
The group is just paused. We did not delete it, but had to briefly pause it in relation to a few abusive members.
Why is the Google page saying ‘Permanently closed’ at our address?
A team member turned it off. We intend to turn it back on.