Ninja Blocks, the Aussie startup which raised $1.4 million in the past eight months, has gone bust

Ninja Blocks founder Image: Screenshot.

Australian startup Ninja Blocks, the company that makes home automation systems, has run out of money.

In the eights months since October last year, the startup has raised $1.4 million. $700,000 came late last year in a round which included SingTel Innov8, Blackbird Ventures and 500 Startups. Another $700,000 landed after Ninja Blocks closed a Kickstarter campaign in January.

Now, a blog post on its site simply reads “we’ve run out of money”.

“Right now we’ve run out of all the options we were pursuing,” the company said, adding development on its Sphere product ran overtime and over budget.

“Even with all the ninjas earning far below what they would expect to get somewhere else, our burn rate couldn’t be sustained forever. Ninja Blocks has always run lean, and when the next round of investment fell through we didn’t have much runway left to adjust our course,” the company said.

“We’ve all put big chunks of our lives into this company and it really sucks to see it failing. We’re proud of the product though, and hope it can live on for a while through the community, while we work out how to move forward.”

Launched in 2012 after participating in the Startmate incubator program, Ninja Blocks went on to say there weren’t any viable funding options available to them this time around.

“With no credible source of funding on the horizon, and hardware still undelivered to Kickstarter backers we made the difficult decision to down-tools. Doing this has left the company with enough to pay the creditors and eventually ship almost all the Spheres that were promised,” the company said.

The post is refreshingly honest and the team is willing to talk to others this afternoon about what they learned along the startup journey.

During its latest Kickstarter campaign, Ninja Blocks secured pledges from 1,772 backers. It said almost all of its Spheres were ready to be shipped.

“All but 300 are built and boxed and ready to go. It is just the shipping left to pay,” the company said.

“The final 300 are partially complete, but need more money to finish. As of right now, we don’t have that money.

“We have some final grant money arriving in a few months. A few of us are looking at loaning the company the money before then to pay for the shipping.

“The current plan is to try and get at least one sphere to each backer, so the people who expected to receive more than one may not get their whole reward.

“This feels wrong, like we’ll be annoying those people who were our strongest supporters, but we don’t have a better option. If and when we could get Ninja back up and running, building and shipping those 300 Spheres would be our first job and highest priority.”

As for people who have bought straight from the Ninja Blocks site in the past few months, the startup said those customers will receive a refund shortly. But those who bought during the “pre-sales” period and on Kickstarter won’t be receiving a refund.

The startup said it would keep its forums running as long as the community uses them and it will scale back its Sphere cloud so it doesn’t cost as much to run.

All of Sphere is now open source and the founders have said they will be around to give advice and push updates to Spheres if the community tells them to.

“Alternatively, you could also tell us to piss off, and run your own cloud instead (there will be instructions telling you how to do that),” Ninja Blocks said.

As for whether the company thinks there is hope, it said: “We want to keep the team together and working on Sphere. If we can find a way to do that, we will. I know that’s not a good answer, but it’s the best we have.”

The company is having drinks at the Lord Raglan hotel in Alexandria, Sydney from 6pm today to let people call them names or commiserate with them in person.

They’ll “answer your questions while you tell us all the things we did wrong and have a few drinks”.

You can read the full blog post here.

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