Big Deals Q2: KO Attorneys Seal Trio of Deals for New Robotics Company

Attorneys from Koenig Oelsner Taylor Schoenfeld & Gaddis represented Company Six, a Boulder-based robotics and cloud technology firm, in a multi-million-dollar combo deal in Q2. 

The transaction, which closed in May, combined a new company spinout, licensing negotiations and an equity financing round that raised more than $3 million. Company Six is a spinoff of another Boulder company, Sphero, whose focus is on educational robots and technology. Company Six plans to apply some of the same technology and expertise to build intelligent robots and AI-based software for first responders, government, defense and “those who work in dangerous situations,” according to a press release from the two companies. 

“It was a spinout designed to take a lot of the core technology that Sphero has developed in the education market and apply it to a different vertical,” said KO attorney Ian Kuliasha, adding that the three transactions — the spinout, licensing and financing — all took place within a couple months.

The $3 million seed investment round was led by San Francisco-based Spider Capital and joined by existing Sphero investors Foundry Group and Techstars, both headquartered in Boulder, and new investor GAN Ventures of Denver.

According to KO partner Jon Taylor, the firm had a longstanding relationship with Sphero and had worked with the company on unrelated licensing and commercial matters and on its 2019 acquisition of littleBits, a producer of science and tech-themed learning kits for kids. It was Kuliasha’s personal connections to Company Six CEO Jim Booth and Chairman Paul Berberian — Kuliasha’s wife had worked with them — that brought KO and the new company together for the trio of deals.    

 “Despite the fact that this was a friendly transaction, with Sphero spinning out some existing technology into a new company and some overlapping investors,” Taylor said, “one of our roles was to make sure that it was an arm’s-length transaction and heavily negotiated on all three sides.” 

Kuliasha credited KO partner Dan Fredrickson with “most of the heavy lifting” in working out a licensing agreement. “These are friendly parties, but at the end of the day, everybody needs to be happy with the terms of the license,” Kuliasha said. “We had to make sure that everyone was satisfied with what technology is going to be licensed and what technology is going to be commercialized by each party.”

The team started working on the deals in early April when, in Taylor’s words, “the world was kind of going topsy-turvy” due to the pandemic and new work-from-home arrangements. At the time, Taylor said, many deals were on hold, but the Company Six transactions moved forward.

“I think Company Six is a really good case study on how to get financing done during COVID,” Kuliasha said, adding the deal brought together “all the key pieces,” including an experienced team, existing relationships with investors and great technology.  

“Great companies are still being financed every day,” Kuliasha said. “Investor relationships really matter and finding and building teams with as much entrepreneurial experience as possible is just a huge leg up.”

The pandemic did have an effect on VC transactions in Q2, according to Taylor, starting with a “significant cutoff” in April as VCs focused on taking care of their existing portfolio companies. But the trend has started to reverse, he said, and data shows deal volume is “almost back up to where it was this time last year, on a monthly basis.” 

When it comes to the companies looking for funding, they’d better be ready to talk about how coronavirus affects them. “Regardless of what business they are, they have to address COVID somehow,” Taylor said, “as in how their business benefits from COVID or how their business is COVID-proof or how their business is susceptible to an extended shutdown. I think it’s just part of discussion now.”

— Jessica Folker

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