Vicis, the high-profile Seattle startup that garnered support from the NFL for its high-tech football helmet, is in financial trouble.
The company is running out of money, has furloughed employees, and may shut down operations, according to documents reviewed by The New York Times.
It’s an abrupt downfall for Vicis, which spun out of the University of Washington in 2014 to develop a helmet with multiple, specialized layers built to mitigate the impacts believed to cause concussions.
More than three-quarters of all NFL teams have a starter who wears a $950 Vicis ZERO1 helmet. At the college level, 180 programs have deals with Vicis, up from 125 last year.
The company has raised more than $85 million to date from investors that include current and former NFL players Aaron Rodgers, Russell Wilson, Doug Baldwin, Alex Smith, Roger Staubach, and Jerry Rice.
But that hasn’t been enough to support a sustainable business. Vicis is trying to raise more money at a $5 million valuation — down from a $90 million valuation last year — according to a letter to investors cited by The New York Times, which noted that the company expects to lose $26 million this year.
So what happened?
GeekWire first reported last month that Vicis co-founder and former CEO Dave Marver had stepped down. On Tuesday, Marver described Vicis as “a capital intensive business that does not attract VC interest.”
“That’s a tough formula,” he said via email. “Once through the current capital crunch, the company has the potential to succeed long-term — It has market-leading products, a great brand, and outstanding people.”
Marver was replaced by Ralph Greene, who is serving as interim CEO. GeekWire has contacted Vicis for comment on the details of the New York Times report.
Vicis landed a $1.1 million grant from the NFL and NFL Commissioner Roger Goodell has mentioned Vicis in the past while discussing the league’s equipment innovation. The company also placed first again in the NFL’s recent helmet safety test, though the top three helmets had no statistical difference in performance. Vicis competes with longtime helmet makers such as Riddell and Schutt.
In a statement sent to GeekWire on Tuesday, the NFL’s Jeff Miller, executive VP of Health and Safety Innovation, said Vicis has helped contribute to a “significant shift” in the helmet manufacturing industry.
“The team of engineers at VICIS have proven their ability to innovate to create better performing helmets,” Miller said. “Their ZERO1 helmet topped the list in the NFL and NFLPA’s joint laboratory tests the last three years running. They should be proud of the work they have done — it has contributed to a significant shift in the helmet manufacturing industry that benefits players at the professional level and beyond.”
Vicis also made inroads with youth football. Marver said previously that Vicis’ ultimate goal was to bring the price point down so it could offer its products to younger athletes.
The company’s $495 youth helmet ranked first in Virginia Tech’s inaugural youth football helmet safety ratings by a significant margin and was recently named to Time Magazine’s 100 Best Inventions of 2019.
Vicis’ challenges pose questions about the larger issue of safety in football and whether advanced helmets can actually help prevent brain disease — and whether companies can operate profitability while investing in research and development.
“If a company like VICIS has trouble making it, it will be that much more difficult for future companies with promising technology to raise capital,” Marver said. “That’s not good for football and it’s not good for the kids the company has worked so hard to protect.”
Participation in football has declined in recent years, and head injuries are a contributing factor. Nearly half of parents say they would sway their kids away from playing football due to concerns over concussions, according to a poll last year from NBC and The Wall Street Journal. The NFL and the NCAA teamed up this summer to make the sport of football safer.
Vicis was looking to create helmets for other sports. It debuted a soft helmet for use during practices, 7-on-7, and flag football in July. The company also has a military arm; it received a contract last year from the U.S. Army to develop technology for advanced combat helmets.
The company was founded by Marver; Per Reinhall, chair of the UW’s mechanical engineering department; and Vicis’ CTO, and Samuel Browd, professor of neurological surgery at the UW and Vicis’ CMO. UW engineering professor Jonathan Posner is another co-founder; he left the company in 2015.
Source: Geek Wire