🧀 sliding cheese turns $445M into $0

Welcome to this week’s edition of CROWDSCALE, where we bring Shark Tank to your inbox. We’ve got 3 great stories this week:

• 🍕 Mama Mia! Robotic pizza delivery startup Zume shuts down

• 🏎️Start Your Engines: StartEngine achieves a funding milestone

• 🍔 Burnt Burgers: Beast Burger hangs up its spatula

Everyone knows of Zoom, the video conferencing software and arch-nemesis of non-techy boomers. Not everyone knows Zume, its younger, cooler brother.

Zume was a California startup looking to spice up the pizza delivery game (no relation to Zoom at all btw). Zume set out to robotically cook pizzas in the back of trucks while en route to the customer’s location.

The idea was to get blazingly fast delivery as the trucks could produce up to 120 pizzas in an hour. They raised an ungodly amount of money - $445M in funding poured in from VC institutions. (Fun fact, less than 5,700 companies worldwide are worth more than that capital infusion alone)

$375M of that total sum came from Softbank alone - a huge bet by most standards.

You would think that with that much on the line they would conduct lots of due diligence. Well, they overlooked one major flaw in the business…the cheese kept sliding off the pizza while in transit!

Zume could not find a way to account for bumps in the road, turns, and sudden stops. They abandoned their saucy dream of delivery, and attempted to park the trucks in central locations with scooters actually delivering the pizza.

That model didn’t really work, and they made one last-ditch effort to stay alive. The company laid off 50% of its staff and pivoted to producing sustainable packaging (they had acquired a sustainable packaging startup earlier and decided to go all in here).

The major pivot was too little too late, and the company recently announced that it would be shutting down operations completely. While Zume was not crowdfunded by retail investors, there are many robotic food & beverage startups that are.

Most directly related is Piestro, a robotic pizza vending machine promising artisanal pizza in 3 minutes. They’ve raised $12M+ via a series of community rounds through StartEngine + DealMaker. Some of the other notable ones include:

• Miso Robotics - Makers of Flippy, a robotic arm that can cook burgers + fries

• Blendid - Autonomous robotic smoothie kiosk, partnered with Jamba Juice

• CafeX - Autonomous kiosk that produces coffees & other beverages (I invested in this one!)

StartEngine is the largest equity crowdfunding platform if you count both Reg CF and Reg A+ raises. They’ve accomplished this in part by aggressively fundraising from their own community.

This past week, they cleared $15M in funding for their latest round, bringing their total funding up to $77.4M.

This far outpaces the #2 platform in the space, Wefunder, which has raised $11.7M from retail investors. I should note that this is somewhat by choice, Wefunder has held less funding rounds for itself and markets their raises far less aggressively.

Investing in StartEngine is a great example of the picks & shovels strategy - when there’s a gold rush, one of the most surefire ways to make money was not to go digging for gold, but to sell the mining equipment.

Equity crowdfunding has grown rapidly over the past few years, and StartEngine has been a major benefactor by providing the platform for startups to list on. I am a big proponent of equity crowdfunding (duh) and so I am an investor in both StartEngine & Wefunder.

I started this newsletter less than a year ago and there are now well over 2,000 readers tuning in each week (thank you all so much ♥️ ). I’ll take that as a signal that equity crowdfunding still has a lot of room to grow!

MrBeast is one of the largest influencers in the world, with billions of views on YouTube. Over the weekend, we found out that his ‘MrBeast Burger’ is shutting down.

There was no statement, press release, or special announcement. MrBeast just responded to a Twitter user who asked, and was like ‘yeah, it’s closing’.

The past 5 years have seen celebrities slap their branding on everything. Every celebrity has either their own tequila, cell service plan, cleaning brand, etc.

This is a major pullback from that overall trend - restaurants appear to be a tricky sector for celebrity logo-slaps. MrBeast claimed that restaurants selling his Beast Burger patties were impossible to control in terms of quality.

Meaning, if a partner restaurant was burning his burgers to a fiery crisp, he wasn’t able to do much to protect the quality.

MrBeast claims to be focusing on his snacks/chocolates line Feastables, which he has 100% control over.

That’s a wrap, thanks for reading!

Please note that this is not financial advice, nor a recommendation to invest in any of the startups mentioned. Readers should conduct their own due diligence and understand that startup investing is a risky asset class.