Spinn taps into $40M to create better coffee brewing, discovery experiences

When you are a coffee lover, taste matters, and Spinn is brewing up some fresh funding in the way of a $20 million funding round, led by Spark Capital, to bring connected coffee to new customers through its hardware-enabled coffee marketplace.

Joining Spark in the round were Amazon’s Alexa Fund, Bar 9 Ventures and existing investors. It gives the Los Angeles-based company a total of $37 million in funding to date, CEO Roderick de Rode told TechCrunch. He isn’t defining this round, but said Spinn previously raised both Series A and B rounds.

“SPINN is doing for coffee what Dyson did for vacuums and what Nest did for homes, rethinking technology and connectivity for better results,” said Kevin Thau, general partner at Spark Capital, in a written statement. “Their approach, from machine design to roaster assortment, is elevating the entire industry and delivering what consumers seek today: delicious tasting coffee brewed to their personal preferences, with the smallest impact on the planet.”

Spinn debuted its centrifugal brewing method at TechCrunch’s Startup Battlefield in 2016. The connected coffee maker uses centrifugal force to spin, instead of press, coffee grounds. De Rode says this results in a cup of coffee tasting how it was intended by the roaster. The machines can be controlled via voice command from Amazon’s Alexa or a single tap on the machine or from a mobile app.

A survey released in April by National Coffee Association USA found that the global pandemic was the driver for 85% of Americans drinking at least one cup of coffee at home, up 8% from January 2020. Nearly 60% of Americans drink coffee every day, and one-quarter purchased a new home coffee machine over the past year.

In addition to Spinn, other startups are coming out with machines aimed at making a better cup; for example, Osma is a new coffee-making technique to make a strong espresso-like drink at any temperature, including icy cold.

Spinn itself has three coffee makers to choose from that retail for $479 to $799, according to its website. The machines don’t require any filters or coffee pods and make a variety of styles, including espresso, Americano, drip and cold brew.

The marketplace offers over 1,500 different kinds of coffee from more than 500 artisan roasters around the world. Customers add their coffee choices to a playlist of sorts, which can be specifically curated to ship or scheduled randomly, de Rode said. Drinkers can leave reviews and get recommendations, as well as take a quiz to match with various coffees.

He plans to use the new funding to further grow and develop its patented brewing technologies, and complete delivery of outstanding pre-orders.

Though de Rode wouldn’t go into specifics about Spinn’s growth metrics, he said there has been triple-digit growth from home users. He aims to do for coffee what Vivino did with wine: provide educational content about the coffee options and the roasters themselves.

“The coffee industry is becoming a food thing just like wine,” de Rode said. “People want to understand the different kinds of beans to make more sophisticated choices. We try to bridge the gap between the coffee shop and home.”


Ruhnn, a Chinese startup that makes influencers, raises $125M in U.S. IPO

Ruhnn, a company that enables influencers to sell through ecommerce and is plotting to change the faces of China’s fashion industry, has raised $125 million after it listed on the Nasdaq on Wednesday.

The company sold 10 million American Depositary Shares at $12.5 a pop, the midpoint of its expected range. In an earlier filing with the U.S. Securities and Exchange Commission, the Alibaba-backed firm targeted to raise $200 million from its initial public offering.

While big brands in the U.S. are turning to influencers for marketing actions, a similar trend has been brewing in China. Key opinion leaders, or KOLs as they are locally called, build up millions of followers across social media on account of their expertise in specific fields, ranging from video games to Korean fashion. Recognizing their commercial possibility, savvy talent managers jostle to sign these stars to generate ecommerce success.

Frost & Sullivan’s data shows sales generated by China’s KOLs reached 32.9 billion yuan ($4.9 billion) in 2017 and are expected to produce a healthy 40.4 percent compounded annual growth rate (CAGR) over the next five years. Though in its nascent state, the KOL economy has charmed China’s younger generations. Ruhnn says more than 80 percent of the fans following its KOLs are millennials, or, people born between the 1980s to early 2000s.


Ruhnn’s management team / Photo: Ruhnn via Weibo

Ruhnn, which was founded in 2016 by Feng Min, a former online shop owner, is one of the early movers to capitalize on China’s up-and-coming internet stars. The Alibaba-backed company supplies a suite of services for KOLs to connect with fans on one hand and brands and retailers on the other. That means influencers receive training to grow their fame and create digital content to market products. In 2018, Ruhn’s batch of 113 contracted KOLs generated 2 billion yuan ($300 million) in total sales and collected nearly 150 million fans across various social channels.

The firm, which is based in Alibaba’s backyard Hangzhou in eastern China, is more than a talent agency in the traditional sense. The startup operates online stores for online stars and takes care of the full ecommerce cycle, from product design, manufacturing, warehousing, delivery (which it enables through third-party logistics firms) all the way to after-sales services.

The majority of Ruhnn’s revenues comes from direct sales of fashion and lifestyle goods, but the company carved out a less asset-heavy platform model in 2017. The approach essentially lets third-party stores and merchants buy advertising services from Ruhnn’s rank of KOLs. Ruhnn has grown this segment from less than 1 percent of its total revenues in 2017 to 11.7 percent in the nine months ended December 2018.

Companies like Ruhnn, which are sometimes called KOL “facilitators” or “incubators,” not only empower internet celebrities; they are also crucial to social platforms hungry for content. Ruhnn’s stars are all over the Chinese internet, engaging users on WeChat, Weibo and Douyin, which is TikTok’s local version.

Zhang Dayi and her fans / Photo: Zhang Dayi via Weibo

Ruhnn and other ecommerce sites that rely on KOLs to sell, such as NYSE-listed, Hangzhou-based Mogu, are also tipped to shake up China’s fashion supply chain. Traditionally, brands get consumer reaction only after they put things on sale. KOL facilitators flip that process by asking influencers to try on brands’ sample garments. From there the stars will ask fans for feedback, based on which brands can adjust their design and factory orders. Ruhnn has also barcoded its inventory, so KOLs and retailers know exactly how consumer tastes are shifting in real time.

In terms of financial outlook, Ruhnn’s revenues increased from 577.9 million yuan ($86.1 million) to 947.6 million yuan between 2017 and 2018. The company is still operating in the red, incurring a net loss of about 90 million yuan, up from 40.1 million yuan a year ago.

Despite being the largest KOL facilitator by revenue according to data from Frost & Sullivan, Ruhnn faces a few hurdles. A report (in Chinese) done by Tencent shows people born after the 2000s are growing tired of being sold to by KOLs. In addition, China could tighten its tax laws around the nascent KOL industry that can have revenue implications for companies like Ruhnn.

The most pressing issue is perhaps Ruhnn’s overreliance on a small handful of top KOLs. One particular influencer, Zhang Dayi, accounted for about half of its total sales for nearly three years. That means Ruhnn is under tremendous pressure to retain Zhang, who currently serves as the firm’s marketing chief, be it through financial incentives or marketing support for the celebrity.

The problem is not unique to Ruhnn, as creators are key to all of China’s content-heavy platforms including esports streaming site Huya and short video app Douyin. These companies have spent generously to recruit KOLs and deployed big data to track user sentiments, but we all know that a celebrity’s success is at times a matter of luck.