(Bloomberg) — Like robot pizza makers or autonomous baristas, an area of food technology that has captivated numerous venture capitalists is at-home drink machines. Cana Technology Inc. has been pitching an all-in-one beverage maker that can produce cocktails, coffee, seltzer or wine by adding water to its machine-mixed concoctions. The company is backed by the Production Board, which counts Alphabet Inc. and Laurene Powell Jobs as investors and said in January that it had poured $30 million into Cana and planned to expand its staff.
But in a sign of how quickly the venture capital market has turned, Cana’s subsequent fundraising efforts have stalled, and the startup in June quietly laid off 16% of its staff, said people familiar with the business. The cuts included the heads of the company’s product and marketing divisions.
Cana is still actively seeking funds, said Rachel Konrad, a spokeswoman for the Production Board, which incubated Cana and is the primary backer. The staff cuts were a result of supply chain issues that delayed the product’s debut and eliminated the need for certain jobs, she said. Cana is now hiring for several new roles, Konrad said.
The vision for Cana is to build “the world’s first molecular beverage printer.” Whereas a Keurig cup contains a tiny filter and some coffee grounds, Cana mixes together ingredients from various replaceable cartridges, containing alcohol, sugar and other elements, to concoct a simulacrum of a drink chosen from the device’s touchscreen. The company says the product will begin shipping to the first customers next year for $499, and the price will eventually jump to $799. There’s also a membership fee of at least $49 a month.
Cana will require more work to deliver on its vision. Matt Mahar, the chief executive officer, demonstrated a Cana prototype to a reporter in March at the company’s Redwood City, California, headquarters. The grapefruit sparkling water was what you’d expect from a can or a SodaStream: citrusy and effervescent. But the cold brew coffee was watery, and the mimosa tasted like a Capri Sun masquerading as a cocktail. (The Production Board spokeswoman said customers will be able to select an option on the machine to make the coffee stronger.)
A new age of austerity in Silicon Valley threatens unproven hardware projects like Cana’s, said Brian Frank, the founder and general partner of FTW Ventures, which invests in food and agriculture companies. Funding to technology startups last quarter fell the most in over a decade. Job cuts and hiring freezes are widespread across the technology industry, but making electronics typically requires much more capital and time than software. Makers of electric bicycles, electric cars and autonomous vehicles have made significant cutbacks just in the last month.
“Cana has a really audacious goal of trying to make the Star Trek replicator for beverages,” Frank said. “There’s a couple different miracles that need to happen for their business to be successful.”
The company, too, sees itself in missionary terms. The name is a reference to Cana of Galilee, the site where Jesus is believed to have turned water into wine.
Venture capitalists have pursued countertop drink machines in various forms for years, among them the phenomenally successful SodaStream and the ill-fated Juicero. Work on Cana began in 2019 as a research project within the Production Board, which is run by Dave Friedberg, who sold a previous company, Climate Corp., to Monsanto for $1 billion in 2013. Friedberg said in January that Cana spent years developing a catalog of beverages by turning up and dialing down different ingredients to simulate profiles found in complex drinks.
As part of its beverage development process, the company holds blind taste tests to compare them with options already on the market. Several years ago, staff were asked to sample a wine that unintentionally evoked the taste and smell of barbecue sauce, according to two people who were present for the tasting.
The Production Board specializes in the creation and funding of new agriculture, health and bio-manufacturing businesses and says its goal is to “reimagine Earth.” One of Cana’s main goals is to reduce waste associated with bottling and transporting beverages, the company says. The Production Board established Cana as a standalone business and in February, brought in Mahar, a former product manager at Nike Inc. and Vivint Smart Home Inc.
Mahar has expressed ambitious expectations for the company. A month on the job, Mahar told Bloomberg he planned to nearly double headcount by the end of the year to 100. His pitch to prospective investors in recent months projected annual revenue of $1 billion within five years, said people familiar with the presentation who asked not to be identified because the details are private.
The latest fundraising hasn’t gone smoothly. Cana had been seeking $60 million to $80 million, at least double what the Production Board had put into the company so far, the people said. Securing investment has taken longer than anticipated and was a factor contributing to the layoffs, the people said. But the effort continues.
Once the product becomes available, the membership fee will give customers refills of the ingredient cartridges by mail. (Alcohol cartridges cost $39 apiece.) Cana is looking to nail the main drinks and expand the catalog for subscribers over time, Mahar said in March. He envisions Cana could eventually add smoothies and food. Asked whether they would resemble real meals or something like the roast beef gum from Willy Wonka and the Chocolate Factory, Mahar lit up. Willy Wonka, he said coyly, was an inspiration for the company.
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