With the holidays creeping up, is it time to start looking for that special item for that special someone? Will an all-terrain vehicle that looks like a cross between a pogo stick and a scooter and anticipates your every move do?
Better get a Segway Human Transporter while they’re still hot, because if Manchester, N.H.-based Segway LLC cannot raise any more venture capital, it may go the way of the dodo bird.
Despite the nearly $100 million it has spent to develop and market the Transporter and promises that the machine would revolutionize the way people move, Segway is out on the trail looking for an additional $15.8 million. It already has secured $4 million of that.
Investors that have signed on for a ride with Segway’s inventor Dean Kamen and his company, Deka Research, for undisclosed amounts include Kleiner Perkins Caufield & Byers and General Partner John Doerr (who has previously coughed up $38 million of his own capital) before bringing in his firm for more backing. Paul Allaire, Xerox Corp.’s chairman and CEO, invested, as did Vernon Loucks, former chairman and CEO of Baxter International, who’s now a principal with The Aethena Group. Michael Schertzler, representing Credit Suisse First Boston Advisory Partners, joined the bandwagon. Brothers Eric Lemelson, the owner of an Oregon vineyard, and Robert Lemelson, a UCLA psychology professor, are also investors. They’re the sons of the late Jerome Lemelson, whose 500 patents include laser-guided robots, key components of the VCR and fax machine and “Hot Wheels.”
Segway wants more capital to build the company’s brand and to drive sales, both in the United States and abroad, says Carla Vallone, a spokeswoman who rides her scooter to the bank and hair salon a mile from her home in San Diego.
The company will not discuss its finances, but documents filed with the Securities and Exchange Commission reveal that it has raised at least $4 million from investors in rounds of funding completed this year.
Segways have been on the market for about a year now, sold online at Amazon.com and among the other high-priced gadgets at Brookstone stores. The Transporter is a $4,000 battery-powered vehicle that has handlebars and wheels like a bicycle, stands about 4-feet tall, weighs between 65 and 80 pounds and goes up to 12 miles per hour. The exterior hides an internal network of sensors, gyroscopes, software and microprocessors needed to make the thing work. The Segway responds to soft touches: lean forward, it goes forward; lean back and it stops.
The U.S. Postal Service tested the devices, as did FedEx and the National Parks Service. Still, by October, only 6,000 of the human transporters had been sold. Even with their $4,000 price tag, Deka Research hasn’t been able to cover the costs of research and development, estimated to be $100 million for 10 years of work, according to previously published reports. The company has a 77,000 square-foot manufacturing facility capable of churning out 40,000 Segways a month.
Consumers aren’t biting, so the company has begun to scout for alternative markets. Earlier this month Segway sold 15 scooters to university researchers who are working on $26 million worth of DARPA-funded projects to develop robots that can be used on the battlefield.
One group is trying to use the scooters to mobilize a robot that can remove bombs and hazardous materials. Another team is transforming the scooters into mules, which carry up to 100 pounds of gear for soldiers.
The company will have to find more uses for the scooter to give the Transporter a reason for being, and to make the company a profitable enterprise. Research and development continues, Vallone says, and like Deka’s plans for the future, that, too, is confidential.