Investing in Tombot FAQ: The Top Questions From StartEngine Investors
by Tombot Robotics
Tombot has received a variety of questions around our company and our raise on StartEngine. When creating Jennie, our mission was to create a robotic animal designed to alleviate the behavioral and psychological symptoms caused by dementia in millions of seniors worldwide.
We have most recently garnered the attention of Yahoo! Finance, and have seen much excitement around our feature as one of TIME’s Best Inventions! We project for Jennie to be the first FDA-regulated medical grade robot on the market, and through our capital raise on StartEngine will have the financial support needed to scale our efforts.
Here we aim to provide clarity to our investor inquiries by answering several of the most pressing questions and provide a deeper understanding of Tombot and our capital raise.
Q: Why was Tombot created?
A: In 2011 my mother was diagnosed with Alzheimer’s dementia. A short time later, I had to remove her dog for safety reasons. I looked around for substitutes for live animal companions, but didn’t find anything my mother liked. That launched me on a multi-year research and education journey, culminating in a Master’s degree from Stanford University. Along the way I realized that my mother’s story isn’t unique: millions of seniors cannot safely or practically care for a live animal due to a health adversity and therefore miss-out on the many mental and physical health benefits of the human-animal bond. Tombot was launched in 2017 to help these people.
Q: What is the “hair on fire” problem Tombot addresses?
A: Seniors with dementia suffer from behavioral and psychological symptoms of dementia (BPSD). These symptoms include loneliness, depression, and, in Tom’s mother’s case, hallucinations and violent anger. To manage these symptoms, doctors frequently prescribe psychotropic medications. These medications not only turn seniors into zombies, they also carry grave health risks – particularly from the antipsychotics. Which leaves doctors with a terrible choice: either don’t medicate these seniors and risk having them out of compliance with their basic day-to-day care needs, or medicate them and risk killing them. Doctors are urgently looking for alternatives for managing these behavioral health challenges.
Q: Is there research that supports Tombot?
A: Yes. Dozens of peer-reviewed studies have been published that show that robotic animals help some seniors cope with their BPSD symptoms, and reduce their need for psychotropic medications.
Q: Why a realistic robotic puppy?
A: Tombot conducted multiple rounds of consumer studies with hundreds of seniors with dementia. Tombot learned that seniors have a very strong preference for realism in objects with which they are familiar – specifically dogs and cats. Tombot identified realism in appearance, realism in texture, and, most importantly, realism in behaviors as essential elements during its studies.
Q: How did Tombot create such a realistic robotic puppy?
A: When Tombot realized that our robotic animals needed to be realistic, they reached out to Jim Henson’s Creature Shop to perform the artistic design. Best known for the Muppets and the Dark Crystal, Jim Henson’s Creature Shop has also created many realistic animatronic animals for TV and film, including the 2001 movie “Cats and Dogs.” With their help, Tombot is creating what it believes to be are the world’s most realistic robotic animals, starting with Jennie.
Q: Does Tombot have any intellectual property?
A: Yes. Tombot has been granted a design patent along with two trademarks. Tombot has a utility patent application filed with the USPTO and the international PCT, with additional application filings anticipated this year.
Q: How large is the business opportunity?
A: Tombot’s go-to-market customer is a senior with dementia. There are over 90 million seniors worldwide with dementia or pre-dementia mild cognitive impairment. This number is forecasted to grow to over 150 million by 2030. From a business perspective this number is far larger than it seems. The average life expectancy for a senior with dementia is 4.5 years from the time of their diagnosis. That means that the entire population completely refreshes on average every 4.5 years.
Q: Are there additional markets beyond seniors with dementia that Tombot can also address?
A: Tombot uses a scientific and data-driven approach to product development. Jennie was designed to provide specific medical benefits for seniors with dementia. That said, approximately 30% of Tombot’s pre-order and waitlist customers are purchasing Jennie for other health adversities, including adults and seniors with anxiety, loneliness, major depressive disorder, PTSD and children with autism and other special needs. These markets expand the total addressable market by 10s of millions of customers in the US alone. Tombot will formally study these related markets in the future, potentially developing new and more advanced products to provide medical benefits to these additional customer segments.
Q: What is Tombot’s business model?
A: Tombot has two-pronged business model. Tombot sells Jennie directly to the family members of seniors with dementia via its ecommerce website. Additionally, Tombot will distribute its Puppies through professional care organizations such as assisted living, skilled nursing, and senior day care facilities.
Q: What kinds of margins will Tombot make?
A: Tombot is designed to achieve 50% gross margins on Jennie once production hits a scale of 10,000 units per month.
Q: Does Tombot have institutional investors?
A: Yes, including Tombot’s lead institutional investor: Wavemaker Three-Sixty Health.
Q: Does Tombot have evidence of customer traction?
A: Yes. Tombot has over 7,500 pre-order and waitlist customers from 76 different countries.
Q: Why is Tombot choosing to be an FDA-regulated product?
A: Jennie is a medical device, designed to provide specific medical benefits for seniors with dementia. In order to be sold as a medical device, Jennie must meet the FDA’s requirements for its particular medical device classification.
Q: How has COVID-19 affected Tombot?
A: COVID-19 has been very challenging to the business. It has increased the difficulty of raising investor funds, as many traditional sources of venture capital scaled-back their seed investments in new portfolio companies. Additionally, COVID-19 restrictions made travel to visit and manage the supply chain all but impossible. In response to COVID-19, Tombot significantly scaled-back expenses and moved employees to a virtual office set-up. The good news is there is light at the end of the tunnel. Tombot significantly increased its funding in the second half of 2020, and expects that in combination with the StartEngine campaign, it will meet its fundraising needs through the first 2,500 customer shipments. We plan to reoccupy our offices once it is safe to do so.
Q: Has COVID-19 created new business opportunities?
A: Yes. Unfortunately, many people have come to understand the mental and emotional stress of being cut-off from loved ones. Tombot was selected as a co-winner of the Aging2.0 Global Competition for Mitigating Social Isolation and Loneliness in Seniors. TIME magazine selected Tombot as one of their 2020 Best Inventions, and Tombot is one of the very few advanced technologies for seniors with dementia. Frequent media attention has resulted in significant growth in Tombot waitlist since the pandemic began.
Have More Investment Questions? Post Them on Our StartEngine Page!
We value your feedback and appreciate all of the questions we have received from our community. We encourage you to leave any additional questions you may have on our StartEngine page, and visit our website or our Facebook, LinkedIn, and Instagram social media channels to stay informed on all Tombot news and updates!
If you’d like to join us as an investor, visit our StartEngine page or head over to our most recent blog update: Regulation Crowdfunding 101: Learn How You Can Own Shares in Tombot