How Cobalt robotics company raised $13 million with almost no prep

Erik Schluntz and Travis Deyle (left) are the
cofounders of Cobalt.
Cobalt

• Security robotics company Cobalt raised $13 million in
  a Series A round of financing this year, despite putting
  together a pitch deck the night before meeting with
  VCs.
• Cobalt’s CEO Travis Deyle said the company wowed
  investors because it was able to deliver on two goals.
• Deyle set out to have a product on the market within
  the first year and land a paying customer before building
  anything.

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Raising venture capital for a startup is no cakewalk. There are
high stakes, probing questions from investors, and an unspoken
pressure from your employees to return to the office with a term
sheet.

So it’s noteworthy that Travis Deyle and Erik Schluntz
raised $13 million from investors for their security robotics
company, Cobalt,
this year, despite putting so little time into preparing their
pitch.

“Ours happened so quickly. That sounds cheesy, but we expected it
to be a giant slog. The bar for a Series A is substantial,” Deyle
said.

He and his cofounder were out mixing with venture capitalists
when the duo suggested, “Hey, we think we’re going to raise in
six months,” Deyle told Business Insider. “Then it just kicked
off into gear. We prepared our deck the night before our partner
meeting.”

Sequoia Capital, Storm Ventures, and Founders Fund are among the
investors pouring
a total of $16.5 million into Cobalt, which makes a roving,
robotic security guard that can patrol offices, detect intruders,
and alert human authorities in the event of an incident.

According to Deyle, Cobalt had two things going for it that
made raising the Series A easier than it should have been.

Deyle and Schluntz set two goals for the company
before launching the business: have a product on the
market within the first year, and land a paying customer before
building anything. Those goals are ambitious for any
startup, but especially for one building a five-foot-tall,
all-seeing security robot with the intestines of a self-driving
car.

Deyle said they delivered on both fronts (sort of), and
that doing so wowed their potential investors into plunking down
$13 million.

Here’s how they did it

Deyle, who worked on developing smart
contact lenses at GoogleX, and Schluntz, who was an
intern at SpaceX before launching Cobalt, spent months
interviewing people across industries to figure out what exactly
they should build. They found demand for robots that could help
companies save money on human security guards.

The first version of a Cobalt robot had sensors and wires
tucked into gallon buckets that were bolted together. After some
months, the robot got smarter — and more handsome. The company
tapped Yves Behar and his design consultancy fuseproject to create a look and feel for the
robot. Its matte blue body covered in fabric, which hides some 60
sensors, a thermal camera, and a carbon monoxide detector
underneath, is more reminiscent of the Roomba than
RoboCop.

An employee engages a
security robot from Cobalt.
Cobalt

Cobalt started testing the robot at a nurse staffing company in
the San Francisco Bay Area, before landing its first customer,
which Deyle declined to name, in the first 12 months of the
company’s existence. Deyle said he also had handshake agreements
with other potential customers before Cobalt came out of stealth
mode.

“Our business model is sound,” Deyle said. “There’s no quantum
leap in technology. We do not have to get to 100% autonomy in
order for our business model to work. Our business model works as
it is.”

Right now, there are only a handful of Cobalt robots patrolling
offices, warehouses, and manufacturing sites across the Bay Area
and the company’s second market, Chicago.

The company decided it was ready to raise a Series A when
customers started asking if they could lease more robots for
their offices.

Deyle said he aims to use the cash infusion from Sequoia to
expand their coverage. Cobalt plans to maintain operations hubs
in every city where it has customers, so the company can quickly
deploy backup robots if a customer encounters an issue with their
unit.

Having a product on the market for a year means there are already
fewer surprises, and fewer breakdowns, according to Deyle. It’s
one of the biggest advantages of building a company in such short
time.

“The real world is your biggest challenge,” Deyle said. “So let’s
get the bots out of the labs and into real environments.”