In the pre-COVID world, thousands of professionally-produced live events happened each day. Conferences, trade shows, concerts, parties — all of them need high-quality audio equipment to transmit sound to attendees, whether for keynote speeches or DJ sets. 

Professional audio setups are not for the faint of heart. Audio equipment and audio design services are a significant line item in event planners’ budgets and hidden costs add up. Professional audio setups typically require cables, wifi, and constant monitoring by audio professionals. 

To put it simply, producing great sound for a large event is extremely difficult. It’s complicated, time-consuming, and expensive, even if you’re an audio professional that designs sound for a living. In a world in which even the most complex processes are being streamlined and automated, is there an innovative way to democratize high-quality audio?

Audios is a cableless loudspeaker company producing high-quality, wireless-enabled loudspeakers for professional events and venues. While the typical loudspeaker requires significant setup time (wiring various cables, connecting several loudspeakers together, etc.) and constant costs to replace cables (up to $1,500 per year), Audios loudspeakers are simple and easy to install. 

To build an audio system for an event of any size in any venue, users can simply place Audios loudspeakers on stands distributed around the event location and press the power button on each speaker. The speakers automatically connect to each other wirelessly, ready to play from any source of audio. Audios speakers require zero cable set-up, have a range of 100 feet between each speaker, and boast almost eight hours of battery life. Audios’ technology (wireless speaker connectivity, battery replacement systems, etc.) is patented or moving toward being patented — two patents have been granted, one is pending, and three are awaiting submission. 

In the long term, Audios speakers will be available for purchase by any average consumer though being retailed by audio distributors and dealers. Audios’ short term focus, though, is renting Audios speakers to event venues and other audio professionals. Rental costs for a set of Audios speakers are far less than purchasing a cabled set of speakers. Audio believes that a rental model that allows the company to produce only the speakers that will immediately generate revenue (instead of stocking a warehouse of expensive inventory) is a sustainable path to growth. 

Audios was founded in 2016, and the company has not yet generated revenue. The last four years have been focused on engineering and designing Audios’ proprietary speaker technology as well as securing initial letters of interest from event venues and music professionals. Audios operated at a net loss of roughly $41,000 in 2018 and roughly $262,000 in 2019. 

Audios was co-founded by Erik Young and David Engler, both engineers. CEO Youngworked at HP for seven years as a performance and software engineer before founding Audios in 2016. Engler has 23 years of experience as a hardware engineer for HP. The pair hold a combined 19 patents. 

Audios is advised by Charles Huang and Andy Rachleff, both investors on the company’s cap table. Huang is the co-creator of Guitar Hero and is now an angel investor. Rachleff is the founder of Wealthfront and the co-founder of Benchmark Capital, a $3 billion fund.

COVID had a significant impact on Audios’ business, given that the company markets primarily to event venues and performing professionals who are unable to host large events for the foreseeable future. Audios has pivoted to focus on three goals — remain lean, focus on customer retention among interested partners, and scale into larger market segments post-COVID. 

The majority of capital raised in the current funding round will be used to bring Audios speakers to market, including sales and marketing costs. Sizable portions will be devoted to remaining engineering and product development, and manufacturing a small batch of speakers to begin rentals. 

While Audios intends to begin with speaker rentals, the company’s long-term goal is to augment rental revenue with sales revenue. After roughly five years, Audios projects that rental revenue will comprise less than a fifth of total revenue, with the majority split between direct sales and retail sales. In the even longer term, Audios intends to introduce additional audio products in both the professional audio and consumer electronics categories.

Audios displays both positive and negative signals for prospective investors to consider, which balance out to a neutral rating. 

On the positive side, Audios speakers are differentiated from competitors’ products in that they are cableless, battery-powered with long battery life, and feature simple connectivity to audio sources to make the production of sound as simple as possible. Moreover, Audios’ technology is patented — the company already holds several patents, with more on the way. These patents were made possible by the Audios’ team’s significant engineering experience, which is also a differentiator. Co-founders Erik Young and David Engler seem well-qualified to produce unique and effective products that blend software and hardware. The company also has the support of influential mentors and investors. 

On the other hand, Audios has not yet generated any revenue — a challenge made worse by the COVID pandemic. The events industry is arguably one of the hardest-hit industries of all in 2020. Struggling venues and performers may be more likely to go with what they know in audio products rather than take a risk on a new system (even if only as a rental). Audios requires a sizable amount of capital to continue research and development, and that capital is generating zero return thus far. Audios is also light on the details of how its audio connectivity system actually works (including the user’s actual experience of hooking up an audio source to the speakers). The company has been in existence for four years and seems to still be shoring up basic product capabilities in addition to its lack of revenue. 

In sum, Audios has developed a unique, streamlined loudspeaker system that might indeed be very interesting to event venues and performing professionals seeking a simplified audio solution. The company seems to have a strong founding team and set of advisors to continue developing — and ultimately selling — this product (and others in the future). However, COVID has had a material impact on the events business, and Audios still seems far from generating revenue. Therefore, Audios is a Neutral deal.