For some startups, getting funded means follow the money. For Durham-based Sqord, it’s follow the activity, follow the early adoption, follow the excitement…..and the money.
February 19, 2015
With $2M Raise, Sqord Preps HQ Move to Seattle
West Coast traction prompts Durham wearable tech startup to move executives to Seattle and hire in Durham
The wearable technology startup closed out 2014 with a $2 million strategic investment from Providence Health Ventures, the venture arm of a $13 billion hospital system based in Washington with plans to distribute Sqord’s Booster wristband to more local kids and help the company expand its footprint across the West Coast.
Future plans could also include more Sqord products that inspire child play and collect data about kids’ activities, turning the company into a player in the Internet of Things movement. It’s all part of the company’s mission to shrink childhood obesity rates and improve kids’ overall health as they grow.
But to capitalize on its early successes, the startup born out of UNC’s MBA program, incubated at Groundwork Labs and Chicago’s Techstars accelerator, supported by the community at American Underground and launched with Premera Blue Cross and Providence Health and Services in Washington, must spend more of its time with its customers and investors out west.
That means founder Coleman Greene and his family will move to Seattle this spring, and begin growing an executive team there. He’ll keep (and soon hire for) the development team in Durham, in hopes of growing an East Coast presence for when customers here latch onto Sqord’s products.
The move and West Coast traction weren’t originally by design. But when Greene dreamt up the business in 2011, Fitbit had shipped only about 1,000 units and the Nike FuelBand was still six months from launch. Fitness-tracking wristbands weren’t popular. Though he secured early pilots with BlueCross BlueShield of North Carolina and the local YMCA, it was hard to get local folks excited about it.
“We were and are still a startup, so you focus where the growth is,” Greene says. Once traction began in Washington in 2013, he didn’t have time to circle back to North Carolina conversations that happened early in his journey.
Sqord’s new and improved $34.95 Boosters hit the market last fall—12,000 sold out just before Christmas. Powered with Bluetooth low energy and connected to new Sqord iPhone and Android apps, the waterproof and “practically indestructible” bands integrate with Jawbone devices so parents can also earn points and compete with their kids.
The new Boosters are a big improvement from the original, Greene says. The early device required a USB sync to a computer and had no mobile app. But it was enough to prove the concept. On the market for about a year and a half—nearly 15,000 were sold.
Those sales happened because of a partnership between Providence and health insurance provider Premera Blue Cross, which covered the cost to distribute bands in Washington elementary schools.
When it came time to raise money, Greene met with investors throughout the Triangle, and secured funds from several local angels including startup advisor Lauren Whitehurst. He also secured an investment from Paris-based Kima Ventures, bringing seed funding to $1.2 million in 2013. That converted to equity in the recent round.
Whitehurst was drawn to the company because of “the interesting niche” of wearables for kids, and Greene’s unique business-to -business-to-consumer (B2B2C) model.
“Even though the pace wasn’t hockey stick, it was clear he was gaining traction, and as he gained more traction and talked to more partners, the concept evolved,” she says. The slower than typical pace helped him decide not to target Amazon or Target for early sales of his products.
Sqord has since distinguished itself in the ever-more crowded field of wearable technology by adding users through partnerships like in Washington, where entire schools implement activity programs using Sqord bands without requiring purchase by parents. Greene compares it to the recycling movement, which started in schools and inspired many families to start at home.
“Engagement is important for the wearables conversation right now, because it’s noisy,” Greene says. “We’ve been able to prove it’s stickier and kids are more active when you do a concentrated deployment.”
Even before Sqord joined Techstars and launched its pilot in Seattle, it had the attention of Providence. Greene says the company “has a progressive view of the changes in health care,” inspired by innovating neighbors like Microsoft and Amazon.
“They believe our platform can be a powerful vehicle for population health management,” Greene says. “They see it as a way to engage families around healthy lifestyles.”
The Sqord investment is a small part of a much larger effort to spark innovation within the hospital group. It launched the $150 million fund last fall, hired Amazon executives to run it and announced plans to create an internal digital innovation group. The fund also is a new partner in the Sprint and Techstars Mobile Health Accelerator in Kansas City. Greene believes it’ll be an important partner if Sqord can integrate wearables into a bigger mission to be a “fun entertainment brand of tech-enabled active play for kids.”
For now, Providence is helping Sqord expand in Seattle and begin pilots this spring in Portland, Ore., Anchorage, Spokane, Olympia and southern California. From a cost and production standpoint, Greene’s method has helped Sqord scale incrementally, and without big investments in inventory. But this spring’s challenge will center around growing manufacturing capability, Greene says.
What might help solve that problem are additional relationships with West Coast investors, whom Greene says are interested in future rounds of funding. The move makes it more convenient for him to make those meetings.
But it doesn’t count as a loss for the Triangle, Whitehurst says.
“For us to grow a company to the point that it has two locations and an investor on the West Coast is a success story,” she says. “I think he struggled with how hard it was to raise money here, but I think Coleman would agree the infrastructure here was very helpful and supportive to him in terms of the way he was able to scale.”