The statement on SEC Form RW reads, “The Company decided not to pursue the sale of securities pursuant to the Registration Statement.” With that, Voice Life ended a two yearlong chase for start up capital of $2.7 million.
Efforts that started in July 2015 are a textbook case in how not to raise capital. In an era when capital is flowing for just about every purpose, Voice Life stands out. What were they thinking?
The Business Sector is Hot
The Internet of Things (IoT) is one white-hot area of technology. What does Voice Life do? The company is developing technology to enable wireless charging of multiple electronic devices at a distance combining Blue Tooth with innovative Artificial Intelligence algorithms. They call their product AI AirCharge.
Founders of the company believe that the big advantage of their AI AirCharge technology is the ability to charge multiple devices within the home or an automobile without using a charging pad.
The company believes this technology is unique allowing users to concisely target a fixed or mobile device, track that device as it moves and focus a stream of energy to the device without removing the battery or plug in the device.
There are several different methods for wireless recharging and there is no lack of competition in the IoT marketplace. Company founders believe they are the only ones pursuing Blue Tooth and AI in combination.
The company is developing a line of its own products and addressing OEM’s in the automobile business and other consumer product manufacturers.
Tech Experienced Management
The natural instinct these days is to assume the founders of Voice Life are two 20 something’s with big ideas and no money. Wrong, here is story on founders Robert Smith and Krishna Nath.
Smith has more then thirty years experience in management, marketing and entrepreneurial experience with the likes of Microsoft, USC, Ingram Micro, and Cannon.
Nath has 10+ years of experience coordinating the engineering of mobile device designs. He is skilled in the manufacturing process and the testing of mobile accessories components systems and products accomplishing tasks either directly or through manufacturers in China.
What Went Wrong
How can anybody go wrong when the business focuses on a white-hot area and the management has loads of engineering, marketing and entrepreneurial experience?
The wording on Form RW provides almost no insight. However a thorough look at the original S1 filing tells us everything. It serves as the perfect learning tool for anyone seeking to raise capital.
Abraham Lincoln is credited with the saying that anyone who hires himself for legal advice has a fool for a client. The fact that Voice Life founders had limited expertise in finance did not stop them from hiring themselves as financial advisors. The missteps were plentiful.
To begin, attempting to do a legitimate IPO for only $2.7million is why the Jobs Act is responsible for creating Crowdfunding. These days there are plenty of companies getting funded for under $5 million using one of several Crowdfunding platforms.
Then there is the choice of approach to their IPO efforts. Here is a direct quote from Voice Life S1 filing. “We will sell the common shares ourselves and do not plan to use underwriters or pay any commissions.” Smith and Nath should have used some of their Artificial Intelligence algorithms to figure out that this was not a good idea. Human intelligence understands that you only get what you pay for.
Finally, it is always important to give potential investors a good, clear Use of Proceeds statement.
“We do not intend to employ any material amount of the contemplated offering to discharge any current or future indebtedness of the Company. Moreover, we do not intend to use any proceeds of the offering to acquire any significant assets of acquire any entity. Our management will retain broad discretion over the allocation of the net proceeds from this offering. We may find it necessary or advisable to use the net proceeds from this offering for other purposes, and we will have broad discretion in the application of net proceeds from this offering.”
Abraham Lincoln was right again.