#157 KAV Sports: A New Era in Manufacturing
Typically a startup pitch that requires building a manufacturing facility would send VCs running for the hills. But could Whitman Kwok's high margin, zero-inventory model be the exception to the rule?
This is The Pitch for KAV Sports. Featuring investors Mark Phillips, Paige Finn Doherty and Will Weisman.
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Whitman: Whitman Kwok, founder of KAV and we're based in Silicon Valley with a new factory in Buffalo, New York. Competitive cyclist, aerospace engineer, worked on rocket engines, developed enterprise software, wanted to make a difference and do something that I didn't think would otherwise get done.
I’m Josh Muccio and this is The Pitch. Where startup founders raise millions and listeners can invest.
Today on the show, Whitman Kwok pitches an entirely new way to manufacture consumer products, right here in the good ol’ US of A. Starting … with high-end custom bike helmets.
Whitman: The problem space drew me in, you have to have to be a little bit crazy that the math doesn't work out rationally. Like, yes, we're building what we believe will be a billion dollar company. But you do it because you do believe that it is a quantum leap in terms of benefits for the people we serve.
The Pitch for KAV Sports is coming up, after this. And whether you’re watching or listening on YouTube, Patreon or your favorite podcast player - thanks so much for subscribing and don’t forget to turn on notifications.
[break]
Welcome back to The Pitch for KAV Sports. Let’s meet the investors
Paige Finn Doherty with Behind Genius Ventures.
What gets me to that hell yes conviction, it’s a founder that deeply understands both sides of the business
A new investor to the show, Will Weisman with KittyHawk, the firm that backed geCKo Materials last season
We call ourselves kind of generalist frontier technology
and Mark Phillips with 11 Tribes Ventures
I’m a midwest investor, so we have a different definition of price
[clap]
Mark: Hey there. Hello,
Paige: Paige. Nice to meet you, Whitman.
Will: Hey, Whitman. Will, great to meet you.
Mark: You're gonna have to come all the way around.
Whitman: Yeah, I'm gonna have to get a long arm. Otherwise, right?
Mark: No problem.
Whitman: I probably walked the wrong direction, not sure what the etiquette is here on camera. It's really nice to be here. It's nice to meet all you. I'm Whitman Kwok. I'm the CEO of KAV. Unofficially, I'm the chief crash dummy for the company as well. We make 3D-printed custom bike helmets. It's the most comfortable helmet you'll ever wear. And the 3D printed enabled crumple zones protect you. So God forbid you get in a crash, you get to walk away. Let me give a little bit of history about myself and kind of how we, how we got here. So I was a competitive cyclist. I worked on rocket engines aerospace as an undergrad and I spent the last 25 years of my career in enterprise software. Last company I was the lead PM on the flagship product, Guidewire. um After its IPO, I noticed something quite alarming, there were about 3.8 million concussions in the US alone in sports-related activities. Unfortunately, six of those were on my son's hockey team. Two of the kids ended up being sidelined, couldn't play hockey after their concussions. So I do what engineers do and developed a hockey helmet that was about 10x better statistically at reducing concussion risk. San Jose Sharks, adopted it. A number of hockey teams started adopting it. Noticed there's a big difference between software and hardware. Epiphany struck me and said, on our way to saving lives, there might be a real business here in - in changing the fundamental unit economics of manufacturing. So, we pivoted, we use the same platform, the manufacturing platform that we're using for prototyping. Targeted towards cycling, ubiquitous activity, lots of early adopters, 50 million helmets a year, $6 billion market, uh, not huge, but great for an initial market and option for expansion. It was a $345 helmet at the time. Fast forward today, we have - ah - are introducing what we call a code name R4 helmet. It has the highest safety ratings possible, independently verified and tested. It will give a cyclist a two minute effectively head start on a 60 kilometer race. It's that fast It's custom fit. You can choose and design it to match your kit or your bike. And it supports 80 plus percent margins out of the gate. So it's designed for scale. There's no working capital requirements that - to grow the company. We’ve sold to date about $645,000 worth of product. And we have a high adoption rate amongst pros, Olympians, world class athletes as well as influencers, which is how we've been leveraging and growing the brand. We're doing a three million dollar, seed raise. That is to get us to profitability at the end of this year. So, custom helmets, makes you look great, makes you feel great. Protects you better than anything out there.
Paige: wow
Will: Do you have one with you?
Whitman: I have two actually.
Paige: Oooh. Let's see them.
Will: Always fun to look at the products.
Whitman: So, this is uh, our current model. This uses a proprietary material that we developed ourself, using proprietary fit applications that uses AI to generate fit. You can check that out. it's custom to my head. So, and I've actually worn this one so I wouldn't recommend putting it on your head. So.
Will: How many, how many, this is 3d printed?
Whitman: This is all 3d printed. Everything except the straps are 3d printed.
Will: How many parts?
Whitman: There are five main components of the helmet. And then there's a sub-assembly for the straps, as well as the padding system has a patented pads that, uh, recess in the helmet. If you put a cycling cap underneath, it pulls away and they're a constant force, meaning it feels the same whether you're wearing a cap or not.
Paige: Like this?
Whitman: Yeah. Like a little suspension for your, for your head.
Will: Yeah.
Whitman: I have a advanced prototype as well, which I thought you guys might enjoy.
Paige: Whoa!
Mark: Under lock and key.
Whitman: Actually you guys are literally the only people that's seen this outside of the company at this point.
Paige: Wow!
Whitman: So this is, this is the R4 helmet.
Mark: Come on.
Whitman: The only people that we're sending this to right now are professional athletes.
Mark: Really cool.
Whitman: Uses a new generation of materials, you'll feel the weight, it's aero-optimized. The shells are both removable and color coordinated, so people can go on our website and actually select which colors they want, and design the helmet themselves, so we see really good engagement on that.
Will: So light.
Mark: Very modern, very slick. I feel like you could, you know, this is in a good way, Power Rangers. This could totally be something that a future fighting force would wear. Honeycomb, kind of on the inside,
Whitman: It's used in aerospace and Formula One racing a lot. We have six patents on the honeycomb structure. There are various optimizations made for weight optimization as well as, optimizations for different impact velocities and concussion reduction.
Mark: And I'd say noticeably light.
Will: Yeah. Incredibly light.
Mark: Like when you pick it up, you're like, oh, there's almost nothing there.
Will: Yeah.
Whitman: This is all part of the customer experience, right? The first is you go to the site, you design your helmet. You're like, that looks awesome. Right. It matches my bike or my kit. Second is you look at it and you feel it in your hands when you open the box and like, this is way lighter than what I currently have. Then you put it on your head and you're like, this feels better than anything. it's a great natural virality from a marketing perspective.
Will: Everything is made to order at this point?
Whitman: Virtually everything is made to order. The inputs to this in terms of raw materials are insignificant relative to the cost of the product.
Will: Are you capturing custom information about the users themselves?
Whitman: The app that we use for sizing captures some key uh, information and then it takes three photos and that gives us enough information to create a virtual rendering of their head for measurements purposes, and then we can track that. And so the beauty of our model is that we can try new products very inexpensively and very rapidly, and we don't have any inventory risk doing it. And so our whole product lineup, every quarter, we have different products releasing that target different aspects and grow the addressable market that we have in cycling, but also in adjacent activities and sports.
Mark: I feel like helmet innovation in the world of football has become kind of all the rage.
Whitman: Yeah.
Mark: There's a lot going on there. Is, is, is football, baseball, like are those kind of other sports in the wheelhouse?
Whitman: Yeah, absolutely. So I would characterize the helmet space from a high level, three areas first. Um, sports, then motor, which would be like motorcycle or off road motor biking. And then safety, which would be like industrial applications, construction.
Mark: Right.
Whitman: The sports space is about 65 million helmets a year. About 50 of those are in cycling. Football is about a million. Whereas, some of the other activities that we're sequencing first, just have larger markets.
Mark: So what would be next after cycling?
Whitman: One is that within our cycling demographic, we noticed that a lot of the road cyclists ski, a lot of the mountain bikers snowboard. So, it would be a natural extension to, um, on off season, switch our production capacity to snow sports. From a customer acquisition cost perspective, there's natural leverage increasing the LTV or lifetime value of the customers, right. There's other interesting things happening within the safety and construction market. Those are about 500 million units a year. I associated that with very inexpensive yellow hard hats. But that entire industry is moving to what's called safety helmets. What they're recognizing is that, it's worth spending 200, $250 a helmet because it drops the worker's comp claims. I happen to have experience in enterprise sales because it's a little bit more of a B2B play, but it's a different business model. Those would be the most natural extensions for us.
Will: Who do you sell into when you're focused on the enterprise? Is that direct into big companies? Or is there partners
Whitman: It's not exclusively big companies. But I think strategically, what we'd want to do is land, you know, two or three of the top 20 construction companies as clients and just provide them the business case. Like, look, it will drop your workers comp claims, right? We have all the data showing how much safer it is. And they don't all have to buy it, but we just need two or three of the top 20 and that serves as anchor. They can fund the early product development, right? And then from there do use cases, like classic enterprise sales, right? You, you create use cases and studies and all the other companies are like, Oh, that's interesting. Like we probably need to do that because, um, X, Y, and Z have as well.
Paige: Whitman, your command of the business is really impressive. I love how you've thought about from first principles, like focusing on the super premium product with a high margin. Seems like you have like a deep understanding of the technical aspects as well as like the value you're providing to the customer and then also like how the business looks overall and like the different directions it could go in. Sounds like a lot of this is coming from your time in enterprise software at Guidewire. Would love to hear more about how you're applying your software learnings to building a hardware company.
Whitman: Oh, great. Yeah, thank you. It's almost as if I put everything I love into this company.
[laughter]
Whitman: So um, the question that I had when building KAV was, how do you take the best of SaaS, and then add to it some more? And so the, the downside to SaaS is it is software. It's hidden away, right? So the advantage we have is this is very front and center. It's on the head. We found early on that being on the head is great for social media. It's always in the shot. From a business unit economics perspective is, well, what if we could make manufacturing like a data center? What if we just use commodity hardware? How do you do that without the product looking like crap, right? Software - happen to have a software background. What if we design the physics, right? And, and basically, compensate for all the variations, vibrations and things that you have in a hobbyist printer, but do it in software. Now we have a model where printers are under a thousand dollars. We can procure them in two days. We can set them up in a day. It is literally like a server. Sales are increasing. We communicate with customers that it's a two to three week lead time. If we get a rush of sales, buy a bunch of printers, install them. They pay for themselves before the 30 - the net 30 terms are due. And so we come out ahead and the business is always growing. So that's a little bit of what I brought on the enterprise software.
Paige: Yeah, can you maybe talk a little bit more about the engineering team that you built as well?
Whitman: Yeah, um we hire polymaths. I find, early companies, this is my sixth startup, generalists are way better. You just, you're always pivoting, you're always changing, so you, you just want to have a team that's dynamic. But specifically with what we do, it's a combination of software, hardware, material science, and then mechanical CAD design. Um, it's nice to have people who have two or three of those skill sets so that you have a team of two or three and collaborate intimately and quickly instead of, uh, in the typical hardware company you have to have like a dozen people to, to do this. It's a small team. But yeah, we move very quickly. The helmet I just showed you, that's four weeks into development. A helmet like that typically would take three or four years for, for the big brands to launch. This will be going out much sooner than that.
Paige: Can we, maybe talk a little bit more about your financing journey?
Whitman: So we're doing a seed round, we're raising 3 million, and that's to get profitability, as I said. The round is a price round led by Future Communities Capital. It's at 18 million pre valuation. And I'm really fortunate to have on our cap table folks like Charles Hudson. who like gets us, He's re upped like three and I think he's going on four now times.
Paige: Okay, cool. what is the - from a cap table perspective like how much ownership you have in the company.
Whitman: Yeah um, I personally, after this round, will have like fully diluted will be about 30 percent.
Paige: You'll be 30 percent as the founder?
Whitman: Yeah, and the team will have, across the team, including myself is north of 50%.
Paige: So it sounds like pretty - like pretty generous equity packages for the early team members then?
Whitman: Yeah, I believe so. Like the benefit of having polymaths is also you don't have to hire as many people so I can consolidate equity grants, and improve retention that way and make sure that they share in the upside of the company.
Mark: You talked about profitability and using this round to get to that point. Can you talk a little bit about the desire to get there, what that enables the business to do? And maybe really the capital needs of the business moving forward.
Whitman: Yeah. So, of the three million, about, five to six hundred thousand, um, are going to be going out to building a facility in Buffalo. We won 43 North there amongst the thousand applicants. They've been great. We have a number of tax incentives and other things to help us grow that. Employees, for example, don't pay state taxes, so it's like another recruiting tool that we get out there. So. After that initial investment, as revenues grow, we're literally just slotting these three printers into racks. And it scales quite nicely and there's no additional like working capital requirement. I've negotiated to be 60, 90, 120 day terms on all the materials. So you can also just do the math. If it takes us two to three weeks to deliver a helmet, basically cash conversion cycle is, is hugely positive for us.
Mark: Are you intending to get profitability in 25 or 26?
Whitman: Yes.
Mark: Okay.
Whitman: Yes, at the end of 20 - It'll be cutting very close, but our target is the end of, um, 25.
Mark: Do you expect to raise more capital down the road?
Whitman: I don't expect to need to raise capital. I expect that we will raise capital for strategic reasons. There's enough markets that are growing fast enough that we want to get beachheads into. For us, the strategy is win the head and own the rest of the body. I think also that, it's a matter of time before we have competitors. Right now, we have probably like a $15 or 20 million R and D moat between us and them. So strategically I think getting a big round - we don't publicize any of our previous rounds, but the Series A would be one where we're like, hey, we got these investors, we got this big chunk of change. If you wanna come after us, we're the bar that has to be beat. Every investor you talk to is gonna have to compare you to us. And you're gonna have to make some type of argument of why you're gonna compete against us. So, yeah, I think strategically it will make sense. But financially, no, we won't need to.
Will: What does a win look like to you here? Like, what are you, you know, what are you hoping to build there over time?
Whitman: Yeah, a billion, multi billion dollar company. I mean, I'll speak from investor terms. From a customer perspective, that we are the de facto company that you go to that inspires confidence in the activities that you do. As an investor, I know we have to talk about exits. I believe that we can make a very strong case, having gone through an IPO, of making this a public company. I believe this, uh, sports, in particular, is a large enough space with competitors who, we will look very attractive as an acquisition target. But my, my goals and my preference is run this as an independent company. I feel like the market can support it. And just grow it like gangbusters year over year.
Will: And where, where are you in the fundraise?
Whitman: Yeah, we have the lead. We have two of the three million spoken for. And explicitly kept a million open because Josh convinced me to.
Mark: Whitman, one of the things we're fascinated by at 11 Tribes is the idea of targeting more niche markets with capital efficient business models, but underwriting the growth of those businesses is something maybe a little bit more conservative than a unicorn outcome. Is that something that had crossed your mind as you thought about building the business, or was this always, I want this to kind of be the piece de resistance of my startup experience, and that means something really big?
Whitman: Yeah, it means something really big. And it's, it's not just for me personally, like from a career perspective, it's really more, for me, this is my passion. Like I feel there are multiple things that would make the world better. Let me, if I can do a customer anecdote just for a moment -
Mark: Sure. Please.
Whitman: It's related. Seven years into this, we're producing our first couple set of bike helmets and, team is - team is tired. Like this is kind of one of the low points, but we're starting to ship helmets and we get an email and this customer says, like, look, you saved my life. I got hit by a car, sent me a picture. I'm in the hospital. Every bone in my body is broken. My head's fine, right? No concussion, no, no head trauma, he said. But it's not a matter that I would have been wearing someone else's helmet and maybe would have had the same outcome. I would not have worn a helmet at all. My wife bought me your helmet knowing that I don't wear helmets. It fits so well and I liked how it looked that I wore it every day since, including the day I got hit by the car.
Mark: Wow. That's powerful.
Whitman: So to me, not everyone buys for safety, right? It doesn't mean we can't keep everyone safe. And by making a beautiful product that people love, Yeah, I want to go big because if we're successful, that means everyone's protected. Everyone is enjoying activities that they love. And the team has done what they love doing. So yes, of course I want it bigger than just, a nice little side business or a little cash generating business. And I, and I believe the market, the numbers support that
Mark: Do you think there's a difference between going big and building a business that endures?
We’ll be right back.
Mark: Do you think there's a difference between going big and building a business that endures? Cause I really appreciate what you just said. It's really powerful. And what I don't want is for KAV to get to a place where, because of some of the financing decisions that you make, the business no longer is able to exist when the product is literally saving lives.
Whitman: Yeah. Um, I think it's one of my responsibilities I take very seriously as a CEO. And honestly, I'm glad you asked because it's beholden on the investors. Because there is a piece of this where we may get offers to be acquired and the mission statements may not jive between the acquirer and acquiree. And I've been very - I try to be very selective with investors who, in those cases would give us the leeway to choose what we felt was better long term, both for society and financially, but would have the ability to, to, to wait it out for the best possible offer by all criteria and not just financial.
Mark: Yeah.
Paige: Well, I want to go back to one of the things that you said, when you were sharing the customer anecdote that you were seven years into this. Is that right? And then you, you mentioned prior as well, there was a pivot?
Whitman: Yeah. So I built out the hockey helmet that I alluded to.
Paige: Mm, okay.
Whitman: Um, and that itself was already like a, a two or three year process.
Paige: Yeah.
Whitman: And so, the pivot was really maybe about four years ago.
Paige: Okay. So like 2020?
Whitman: Yeah, roughly. Then we invested in scaling the manufacturing side. So we did two things in parallel. Like, we knew cycling was going to be a better market. And then, how do we build all the, all the infrastructure to support even, like, uh, a proof of concept to see if the business was going to make sense.
Paige: Got it. Okay. Yeah. Cause one of the things I was trying to more deeply understand is it seems that there is significant dilution to the business. My assumption is that it happened in the hockey helmet days or maybe as like a result of the pivot and having to reinvest.
Whitman: Um. I've been getting steady investment as needed. And so. This is the unfortunate side of hardware. It's just, the timelines you're talking about. And if you're truly doing something truly innovative, and I welcome you guys to come visit either of our factories, you'll see the level of investment and the barrier to entry that we're building. To build a barrier to entry just, it requires time. We have six patents that are filed or we got granted. We have about thirty five trade secrets. We have a number of trademarks around our, our brand and then we have proprietary formulation and rights to all the materials. So there, there's a huge stack there.
Mark: Whitman. I mean, this has been, I'm a customer. I'm gonna be a customer. I can't wait to go on the website and check it out. I've been biking all over the place with my kids in a little trailer behind me. I need a better helmet. So the bottom line on top is it's not gonna be a fit for us. And it's not because I don't like the market. I really like what you're targeting. I think you're a really exceptional founder and you have a really clear vision. What we've started to kind of lean into as a firm is trying to identify niche markets with really outstanding products, capital efficient business models, but underwriting the growth of those companies to something that's, I would use the word less volatile, right? And so what I, what I'm struck by is this tension between your desire to be big, actually underpinned by what I feel like is your desire to endure and to continue to exist, so that way those customer stories of 'you literally saved my life' can continue to exist. And I don't think the two are mutually exclusive, but I do think the idea of going big is it necessitates a higher level of volatility within the business. And I want to just stress, neither one is correct or incorrect, but what we get really excited about is the idea of like, hey, what would it look like if a successful outcome of this business was a - a $250 million acquisition to a strategic who is perfectly mission aligned and KAV can continue to grow and be what you hope and desire it to be for the course of the next 30 years.
Whitman: Yeah. I'd like to engage with that and I think um, maybe I should've defined what big means because uh, it wasn't financial necessarily. That scenario you played out to me would constitute success. A 250 million acquisition, particularly if it was in a shorter time frame, right, provides a good return for our investors, of which I'm very cognizant of. And if the missions are aligned, everything I said about more people using the product, us growing into key markets, those are all supported. So, that is..
Mark: I hear that. And I think the, I think the counterpoint to that is then you have to kind of wrestle, I guess is the word with, you have existing investors who have contributed, have certain expectations about growth. And I think the price of this round, I'm a Midwest investor, so we have a different definition of price, but it's a little bit more expensive than where we see businesses at your current revenue mark. So, um, man, I love the discussion. I really love your heart for the work you're doing here. I can like sense it and feel it. I would love to continue the dialogue and see, you know, spend more time digging into it. But I think for the time being, given some of those dynamics, it's going to be a pass for us.
Whitman: I appreciate you being up front.
Mark: Of course.
Whitman: It's always a challenge, like, juggling all the conversations -
Mark: Indeed.
Whitman: So it's nice to know, like, we can engage on this for the long term, and whatnot. But I appreciate that.
Mark: Yeah, I'd enjoy that, yeah, thank you.
Will: So Whitman, I mean, there's so much to love here. Like you, I think, are - you strike me as an extraordinary entrepreneur -
Whitman: I'm worried about where this is going.
[laughter]
Will: To be honest, I'm, I'm not sure where it's going actually. I'm like really struggling with it. I heard so much that I really, really liked. It's not a, a problem space that I have spent much time looking at and really thinking about, But, there's so much about you that represent the type of entrepreneurs that I just love to, to partner with. I just think it's - you're on a very exciting path. I don't understand the competitive dynamics enough. And so that's one of the areas that I'm really want to understand more deeply. Kind of what is, what is really unique here and sustainable from a competitive advantage. I think what I would like to say, if you're open to it, is I would like to learn more. I would like to have a follow on conversation.
Whitman: I would like to entertain that.
Will: Yeah, it's -
Josh: How much, how much would you invest?
Will: I think we'd be in that 500 to a million dollar kind of range, probably.
Whitman: I mean, we, again, we have a million left that's unallocated or up for grabs, so to speak, so I think the more important thing is that you and I are in alignment in terms of fit and answering your questions, and I think I would likewise have a number of questions. Just about like, yeah, about what you're looking for, how you've helped some of the companies in your portfolio. I had the benefit of talking to Capella before coming on, and she thinks very highly of you and so, but I'd love to hear that firsthand as well.
Will: Awesome.
Whitman: Yeah. Thank you.
Paige: Well, uh, Okay,
Whitman: You want to say yes.
Paige: There's so much I love about the business that you built and like you as a founder. I think the style in which you represent the business, your thoughtfulness and thinking through it, understanding like the different markets and their adjacencies. I would say our fund usually invests a bit earlier in the lifecycle. So that's one of the things I was really struggling with, is I think that amount of dilution to the business now is probably a bit later than we would look to invest. And I think one of the things I think about is like, we underwrite every investment in the fund to at least a 30X. So I love working with founders who are looking at building and enduring big business. But for the math to work for our fund, we need to be involved with entrepreneurs earlier on in their journey.
Whitman: Can, can I offer for you, and Mark and Will as well, um - In, in the appendix of my deck, I have different outcomes, and the financial outcomes and like, what the company would look like.
Paige: Yeah. I'm happy to continue the discussion on that front. I think like just doing some back - back of the napkin math on a 21 post to hit like our outcome goals, it would have to be at least a $600 million exit with no additional financing. And as you mentioned, like one of the things that you're looking at is raising a Series A, so that might be like an additional 15 to 20 percent dilution. So, what we'd really be looking at as a fund is a exit outcome of closer to like a $1.2 billion outcome. But I know you're also like seven years into this journey and have built an incredible business. And it seems like for every element of the business, you have some competitive advantage, whether it's like manufacturing or the team that you built or your command of the market. And building in a what people consider to be an unsexy space can have like incredible outcomes.
Whitman: Thank you, Paige. Thank you, Will. Mark.
Will: Awesome.
Mark: It's great to meet you, Whitman.
[thank yous and congrats]
Paige: awesome
Whitman: thank you it was a pleasure it was really great to meet you
[applause]
Will: He seems like an amazing entrepreneur.
Mark: He's awesome.
Will: I love how he talks about building companies. And all of this is, for us, it's like finding and partnering with these amazing human beings who are trying to, you know, build their companies. And so I saw a lot there that I really liked and would love to, you know, be working with him on.
Josh: Yeah. Yeah. Whitman's incredible.
Paige: super compelling entrepreneur.
Will: Yeah. I also thought - I mean, if he hadn't talked about the workplace safety element, like, I would have been an out for sure, just not a big enough market. That to me was a very, very interesting hook and really validating the size of that market will be an important piece as well.
Mark: Will, what do you underwrite deals to, in terms of return multiple?
Will: So we're always trying to think about 50 to 100x type of, yeah, so it's got to be a big company.
Mark: Yeah, I understand, and that requires some type of technological advance. Well it’s just… we underwrite to 10. I heard 30. Yeah. And then 50 to 100. So it's really interesting. You've got a lot of different folks here.
Paige: It's like dependent on your portfolio construction. So like our portfolio construction is all initial checks. We'll do like 25 to 30 per fund.
Mark: Yeah.
Paige: We want like every company in the portfolio to be able to return the fund.
Will: I definitely think of it very much in terms of constructing a portfolio and having as much, like, uncorrelated risks and that sometimes means different stages. We'll sometimes take a swing at something where we think, it's a little further along, but there's still potentially a 100x in front of it or just high degree of confidence that this is gonna be a 20x and then kind of try to size that be appropriately. So ..
Paige: So a bit more flexible for yours?
Will: Yeah, we have, I really, I don't know what this business - like, I like being - like we call ourselves kind of generalist frontier technology. And so try to find very hard problems.
Mark: I love that. Generalist frontier technology.
Will: But it's like -
Mark: That's tough man. That is tough.
Will: Yeah, it's broad, but it, you know, we end up doing a ton in healthcare, but then, you know, aerospace and compute and - but it's driven by the amazing entrepreneurs that we meet.
Mark: That's awesome.
Paige: Yeah. It's hard to predict the future like five years out. I think you like meet entrepreneurs who show you what the future could look like and get really compelled to join that journey.
Will: Yeah. Most of our stuff is, you know, very, very early. And we're the first institutional investor. And we like, things that are really different and have a lot of risk and, and then outsize kind of upside as a result of that.
Josh: Yeah. Well, I'm excited to dig in on the diligence side and follow that process with you. Cause this is one of those founders where the more time we spent with him, like the more conviction we got in Whitman and his ability to execute.
Mark: Those are good.
Josh: All right, guys. Lunchtime.
Paige: Lunchtime.
Whitman left the room with a commitment? From Will? Will’s new.
Coming up after the break, diligence. Or in this case, willigence.
BREAK
Welcome back. A few weeks after the pitch, Whitman got on a call with Will. But due to technical difficulties, we only have Will’s side of the call. So here is a brief montage of Will talking to himself.
Will: Dude. Can you, can you believe Josh's hair? Fucking crazy. So anyway, yeah, it was, uh, it was, it was great to meet you. In terms of sales, you are a hundred percent direct to consumer. Do you move vertically first or do you go over to safety or moto first? I'll need to just think through some of the timing around the when we could potentially close on this and, and kind of really what would be required from a diligence perspective for us to be ready to commit and, and move forward.
The call seemed to go really well. Will was especially excited about future markets, like construction helmets. But a few days later, he sent an email passing on KAV. Not because he didn’t think Whitman was awesome, but rather, the investment wasn’t a custom fit for his current fund.
Which is a bummer because we still wanted to invest. We invest in anything, if we can find a trusty VC to invest alongside. In this case, we already knew Charles Hudson was investing … for the 4th time. He’s been on the last 12 seasons of the show. So you could say we trust him.
But before making the investment ourselves, we also wanted to talk to the lead investor. So Lisa and I got on the phone with Rohit Gupta.
Josh: Do you have any questions about the interview before we dive into it?
Rohit: Please be nice? I don't know.
Lisa: Please be nice. We're not really known for being mean.
Rohit: I don't know. I don't do a lot of this. amateur hour over here.
Josh: Watch out, we're coming for you.
Lisa: Goshhh
Josh: How dare you invest in one of the companies we are interested in investing in too. All right, let's do this.
Josh: Um, Rohit, welcome to the show. You're a venture capitalist from what I understand.
Rohit: Yes. I run Future Communities Capital, early stage venture fund, primarily pre seed and seed. Really the hard, gritty, nasty stuff is kind of where I live. Like, do we even have a product? Does somebody want to pay for this? That's what's interesting to me.
Josh: And you do deep tech.
Rohit: We're generalists, but yeah, a lot of what we do is deep tech. I like, difficult, hard to scale technology and make it scalable.
Josh: You invested in Capella Kerst and Gecko Materials, their very first venture round?
Rohit: I did. I did. She's one of the best founders I got.
Josh: That's awesome.
With all our hard hitting questions out of the way… we got to the story of how Rohit came to invest in KAV. After meeting for coffee in SF, he got an invite from Whitman to come check out the factory.
Rohit: I was like, okay, it's gonna be like two dudes and a 3D printer, you know, they're just gonna print and stuff and just hanging out, you know. But I go there, and it's, I mean, it was phenomenal. They rewrote firmware on all these 3D printers. So they bought off the shelf 3D printers.
Josh: Uh huh
Rohit: It's mass, like, it's just commodity hardware and they just had like, like rows of these things and they're just sort of like grinding out these helmets.
Josh: So you walk in and you see rows of printers everywhere. It's not just two guys and a 3D printer. It's like a legit operation. What happens there? Do you just like wire funds right away? Like, what do you-
Rohit: Oh yeah. So look, I'm, I'm, I'm an irritating investor and I'm going to ask questions forever. And you know, give me the tour, show me how the printers work, tell me how orders like get fulfilled and okay. Then who's assembling these few components and how does it work? He showed me all that. He took me to their, their lab where they like, they have a destructive testing setup thing where they just destroy helmets. And I'm like, this is cool. I want to see helmets get broken. and he told me about, you know, he used to have the destructive, the rig in his house. His wife was like, what are you doing in the garage? Why are you just smashing things?
Josh: It's so funny. Every employee everywhere wants to work from home. But if you're starting a company, get out of the house man, It's not going to work out.
Rohit: Yeah, fair enough
Josh: So what finally convinced you to invest? Was there a moment or a switch where it clicked for you?
Rohit: Okay, so 3D printing, product, all that stuff looks and sounds great but I also need to verify everything right so you know I peddle my bike over and I go to like I go to the ratty bike shop in town and I'm like
I need a helmet guys. And then just walking through the whole process about buying a helmet with this dude, the salesman, the clerk, and he's like, okay, well, cheap helmets are 50 bucks and the expensive ones, like we don't really stock them because we're the ratty bike shop in town, but they're about 300 bucks. like, have you heard of this company that does custom homes? He's like, I haven't. And he's like, that's got it. And then you go like back and forth. It's like, what is that? Like four or 500 bucks. I'm like 225, 250. And he's like, you're kidding me, right? And so I'm just figuring out there's a market for this product, even within what people are paying for helmets. So it's not crazy to say we're going to compete with the market. Okay. Market validation, great, check. And I'm thinking, numbers-wise, where does this company go? Right now, I think they're sort of making money in Redwood City. What happens with Buffalo, the factory that are opening in Buffalo, New York? Margins are gonna be, yeah.
Josh: And that's what this whole round is for, was to build out that facility.
Rohit: Correct. So margins improve. They'll be able to build at scale. They'll be able to pump out more helmets, buffalo, and a little bit cheaper to operate a business in. just a bigger footprint.
Josh: Now the big, I think, concern in the pitch was just like where bike helmets, I think is a 6 billion market overall,
Rohit: Yup, yup
Josh: which is not a large market for venture scale returns.
Rohit: Sure
Josh: So he starts talking about the construction side of things and hard hats. Will seemed really excited about that. But like, what makes you excited? Is it this hard hat thing? Or is it Some other future version of the business that excites you.
Rohit: This is all the same train thought I was on. I don't want to stay a bike helmet company. If he was like, we're a bike helmet company forever. Like, dude, I'm, I'm just, I don't see it.
Josh: Yeah.
Rohit: Right. But like, okay, let's say you have a captive audience in bicyclists, like cycling aficionados, right? And so what else do these people do? If I'm buying a custom bike helmet, I probably do other things that require helmets too, right? Like skiing or snowboarding or something.
Josh: Sure.
Lisa: Okay, so like, what do you think the big picture looks like for Cavsports? Like, is this like a sporting equipment company? this, are they licensing this for like other, or like, are they doing this for other brands and like doing customization for, I don't know, Nike or somebody?
Rohit: Yeah, so look, I think those are all possible, right? Can they move into other verticals? Can they move into other protective gear? Yeah. And then you also look like, to your point, Lisa, like all these large manufacturers, they all tried something custom, right? Adidas, Nike, they all have some sort of custom shoe, they're okay. I think they're way too expensive. think broader, a lot of companies have tried custom, big brands, and they just can't get it to work anywhere near profitability. And this company has. They figured out product one, how to make it profitable. And so they move into other stuff. Yeah, for sure. Do they license the technology? Possible. Do they get bought? That's also possible.
Josh: Consumer product. No inventory. High margins. Fully custom. High margins still? Wow. How is that possible?
Rohit: It's, because like they only, they print on demand, right?
They don't keep any inventory. Like they're, they have a bunch of like printer filament.
Josh: You ended up leading the round.
Rohit: Yeah. It was one of those things where I wasn't actively trying to, Invest in this company. I don't know if he was even raising, but it was just in my mind. And I have this thing where if I'm chewing on something like mentally, that means there's something there, right? And so I just kept bugging Whitman, like, Friday afternoon. Hey guys, what do you think about this? You know, like, What do you think about? Are we going to make construction helmets? Like, you know, like just random one off missives. And they sort of like kept answering my questions. And it just sort of got to the point where I was like, are we raising money here? Are we doing this? So yeah, I kind of was in it.
Josh: Huh
Lisa: Did he raise the round because of you?
Rohit: I don't know. I'm not going to take that kind of credit, but sure. I think that, I think I pushed him. I said, you're going to need money at some point. Have you thought about raising capital now, by the way, I'm interested. You know like
Josh: The only other issue on our show, when Whitman pitched, like everybody seemed super impressed with him. The ones who didn't invest, we're just like, it's a little bit too late. It's a little bit like too far out of our price range. He's raising at the 18 mil pre. So just curious, like your fund, you invest in the pre seed and seed. What makes you comfortable with this valuation in a, you know, in a company like this?
Rohit: I don't think it, I don't think 18 is high. I think I was, I think I got a steal, I'm, I'm, I'm very price conscious. Most of my investments aren't in the Bay area. Because it just. It's crazy. I mean, that's why I love Buffalo. Buffalo is cheap. Founders can go really far with a lot of money. I think if they were just trying to do this in the Bay Area, no matter how much money they raise, it won't work.
Josh: It's weird that I could get excited about a consumer product and a business that's starting a manufacturing plant. Like, manufacturing plus CPG sounds like the opposite of what venture would ever invest in. Which is also why I love it.
Rohit: Look, we're both investors in a tape company, so
Josh: Space Velcro, it's not tape.
Lisa: We like referring to it as space velcro.
Rohit: I love telling people I invested in tape.
And I love telling people I invested in a 3D printed bike helmet. The Pitch Fund invested $200k alongside Rohit and Charles. Whitman is still looking to close out the last million in his round, we’ll give you an update on the season finale. And by the way – that R4 prototype Whitman showed during his pitch – it officially launches on April 10th.
No offer to invest in KAV Sports is being made to the listening audience on today’s show. But you can join our private investor community on Substack. Where you’ll get access to the syndicated deals we’re doing behind the scenes.
So, if you’re an accredited investor, you can apply to join at thepitch.fund — Next week on The Pitch…
Royi: Why are shoes still dumb? I got completely obsessed with this vision and decided to quit my job and pour everything into building the world's first smart running shoe.
Kate: Can we see the shoes?
Royi: Of course.
Kate: They're really lightweight. They're like surprisingly light.
Elizabeth: Is there a reason you decided to make a whole shoe as opposed to an insert?
Royi: Shoes are cool. In the last 15 years, there's not one, but two companies that have entered the running market and had not just modest success, but breakout success. Those two companies are On Running and Hoka.
Elizabeth: The shoe market is huge.
Royi: The way that you purchase running shoes is recurring, right? So every few months, if you're a regular runner, you're buying a new pair, so it's a consumable.
Kate: I can't get over the fact that it's a shoe business.
Charles: I've been thinking about something you said that, that I can't seem to shake
That’s next week! Season 13 is available to watch on YouTube and Patreon, OR listen on your favorite podcast player.
Subscribe to The Pitch right now, and turn on notifications so you don’t miss it. If you enjoyed today’s episode, be sure to hit that like button. We’ll see you next Wednesday, in the PITCH ROOM.
This episode was made by me, Josh Muccio, Lisa Muccio, Anna Ladd, Enoch Kim, and Jackie Papanier. With deal sourcing by Peter Liu, John Alvarez, and Phoebe Sun.
Thank you to our friends at 43North and Rich Smith, LP in The Pitch Fund for introducing us to KAV.
Music in this episode is by The Muse Maker, Breakmaster Cylinder, Fabulist, Sketchbook 2, Eating Granola, Greg Jong, Indigo Jewel, Joanna Katcher, and Peter Jean & The Runaway Queen.
The Pitch is made in partnership with the Vox Media Podcast Network.

Mark Phillips // 11 Tribes Ventures
Investor on The Pitch Seasons 9, 10 & 13
Mark Phillips is the founder and managing partner of 11 Tribes Ventures. Prior to that, Mark was a strategy consultant focused on M&A between corporations and growth stage startups. He actively supported clients throughout the due-diligence and post-merger integration processes on deals totaling more than $750M.

Paige Doherty // Behind Genius Ventures
Investor on The Pitch Seasons 10, 11 & 13
Paige Finn Doherty is a founding partner at Behind Genius Ventures and the author of Seed to Harvest, an illustrated book about venture.

Will Weisman // KittyHawk
Investor on The Pitch Season 13
Will Weisman is the founder and managing partner of KittyHawk, an investment firm focused on seed to pre-IPO companies. KittyHawk supports mission driven entrepreneurs in their quest to build world changing organizations. Prior to KittyHawk, Will was the executive director at Singularity University, a think tank and educational institution focused on solving the world’s biggest problems.