Wireless-charging startup uBeam Inc. is facing a potential crisis.
After riding high on media hype and $23.5 million in venture capital, the Santa Monica company is receiving intense scrutiny after a former top employee questioned claims about its technology and voiced concerns about information it was feeding the press in a series of recent posts on his blog, Lies, Damn Lies, and Startup PR.
Though it has not demonstrated a working prototype, five-year-old uBeam has said its ultrasonic wave technology can generate at least 1.5 watts of electricity at a distance of about 13 feet from a transmitter, enough to provide a trickle charge to a mobile phone or other electronic product.
However, experts have questioned whether or not uBeam can fulfill its promises due to the inherent scientific challenges and the fact that the firm has missed two product launch deadlines.
The blog posts by Paul Reynolds, uBeam’s former vice president of engineering, have added fuel to the fire.
“I made it clear during my meetings that I felt that the claims had extended beyond hyperbole and that I had significant issues of the position it was putting myself and team in,” Reynolds said about his discussions with uBeam investor Mark Suster of Santa Monica’s Upfront Ventures, its biggest backer. “I have not called them a sham, but I am posing questions and letting people decide for themselves.”
UBeam did not respond to multiple requests for an interview.
Suster responded to Reynolds’ criticism on his own widely read blog, Both Sides of the Table, in a May 13 post defending uBeam and Meredith Perry, its 27-year-old co-founder and chief executive.
“Meredith has made claims that she will deliver a working product and I believe her wholeheartedly based on my experience in working with the team over the past 18 months,” Suster wrote.
He did acknowledge, however, that Perry has at times made statements out of “hubris.”
One of those might have come in a February 2015 interview with USA Today in which she was quoted as saying: “UBeam will be there just like you see free Wi-Fi in windows as you walk by shops. It will be everywhere from your local coffee shop to the hotel to theaters to stadiums to airports. You name it.”
Down to wire
With pressure mounting, the company will need to persuade backers to invest again, said Alex Lidow, chief executive of El Segundo semiconductor maker Efficient Power Conversion Corp., whose ultrafast gallium-nitride chips are used in wireless charging products.
“Now that everybody is looking at it with a fishy eye, they really need to demonstrate,” said Lidow. “If they can shut up the naysayers, they’ll get all the money they’ll need.”
UBeam has raised cash from a variety of big names, including Menlo Park’s Andreesen Horowitz, Upfront Ventures, and Peter Thiel’s Founders Fund. UBeam also counts celebrity billionaire Mark Cuban, Yahoo Inc. Chief Executive Marissa Mayer, actor Will Smith and DJ Calvin Harris among its investors.
However, the firm’s most recent $2.6 million round in July was facilitated by Israeli crowdfunding platform OurCrowd and did not include money from institutional venture capital firms. OurCrowd declined to be to be interviewed.
Suster, who declined to comment for this story, acknowledged on his blog that for uBeam to succeed it will need to show the world a marketable product. The company previously said it would launch a product by the end of 2015 and begin production on millions of units this year. The firm is behind schedule, according to Suster, but has plans for four generations of products through 2019.
With its emphasis still on R&D rather than sales, additional funding will be essential for the long difficult road ahead, including a showdown with established-industry rivals such as magnetic-resonance company WiTricity Corp. of Watertown. Mass., said Lidow. Another rival is San Jose’s Energous Corp.
“They have to also prove that can enable a receiver unit that is phenomenally cheap, pretty foolproof, and tiny because it has to fit into an internet-of-things device or cellphone,” he said. “That’s a big hurdle and it’s already a crowded space.”
Future financing rounds could be painful, said Craig Everett, professor of finance at Pepperdine University’s Graziadio School of Business and Management.
“The valuation of the company will clearly take a big hit due to the missed deadlines,” he said. “It will likely be a down round.”
