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From VC to M&A, Smart Home Investments Amounted to $800M This Summer

smart home investment

Startups, incumbent companies and investors were very active in the connected home market this summer, when roughly $800 million in transactions closed in the period between June and the end of August. 

The total investment count was boosted by Nest, which acquired the home video monitoring firm Dropcam for $555 million in June. Nest bought the company in order to expand its product offerings, while also planning to use the video service to enhance monitoring capabilities for its smart thermostats and smoke detectors. 

June also saw new product announcements from major companies, including Honeywell’s new Lyric thermostat designed to rival Nest’s offering, and Apple’s HomeKit for connecting wireless control devices.

Those leading companies set the tone for the next few months, when more than $250 million was raised by startups developing new smart thermostats and open-source communication platforms. Many of the companies added new investments after closing successful crowdfunding campaigns. Below is a list of the transactions from July and August.

July: Spark Labs raises $4.9 million Series-A round

Following a successful Kickstarter campaign that landed it nearly $568,000, San Francisco-based Spark Labs closed a Series A round for $4.9 million to help with product development. Spark has multiple product lines as part of its home management operating system, including an open-source Wi-Fi development kit to connect devices, a cloud-based communications platform, and mobile interface templates to control devices.

July: Tado raises $13.6 million

After pulling in $2.6 million last September and then another $204,287 from Kickstarter this June, the Munich-based startup Tado closed another round worth $13.6 million to expand its sales capabilities. The company’s product is billed as the European competitor to Nest. But as Katie Tweed explained last year, the approach used is different. Tado is developing a geolocation device for boilers that communicates with smartphones, which then send signals back to the learning device. 

July: Samsung acquires SmartThings for an estimated $200 million

Looking to rival Google and Nest in the smart home space, Samsung bought SmartThings, a Washington, D.C.-based startup developing a communications platform for locks, lighting, cameras and thermostats. Neither company revealed the deal’s price tag, but the website TechCrunch reported from sources that it amounted to roughly $200 million. SmartThings will operate as an independent business within Samsung at the company’s Open Innovation Center in Palo Alto, California. The deal was reportedly closed in July, but not announced until August.

August: WigWag pulls in $683,000 as part of a planned $1.3 million raise

Austin, Texas-based WigWag is another startup that saw early funding success through Kickstarter. The company initially raised nearly $455,000 last year in crowdsourced funds. In late August, WigWag closed a $683,000 round from eight undisclosed investors to help it sell its Wi-Fi hub that creates customized rules for controlling a variety of devices, while sending notifications to homeowners via email, text or social media. According to WigWag’s SEC filing, it is planning to raise another $615,000.

August: Zuli closes seed round of $1.7 million

Zuli, a San-Francisco-based maker of Bluetooth-enabled smart plugs, closed a $1.65 million round from a variety of firms and individuals, including Menlo Ventures, Winklevoss Capital, Logitech, DeNA, XG Ventures, FreedomPop CEO Stephen Stokols, and former AT&T CTO Hossein Eslambolchi. And yes, Zuli also had a successful Kickstarter campaign last year, which brought the company more than $175,000 to develop the product. Zuli’s Smartplugs operate on a mesh network and can be customized to control devices based on the homeowner’s preferences, while also monitoring home energy use.

August: IFFT raises $30 million in a Series-B round

IFFT (which stands for If This Then That) has created a rules-based communication platform that lets homeowners create “recipes” for how devices or online media services should respond to certain actions. The company closed a $30 million round led by Norwest Venture Partners to close out August, adding to the $39 million already raised by the San Francisco-based company. In June, IFFT joined Nest’s open developer program, allowing the ability to create recipes for controlling smart thermostats. 

August: Zen raises nearly $40,000 from Indiegogo to roll out a new smart thermostat

Closing out August, Melbourne, Australia-based Zen launched a crowdfunding campaign on Indiegogo to rack up presales and get its new smart thermostat into the U.S. market. The company has already raised four-fifths of its $50,000 goal on Indiegogo. Rather than compete with Nest and others developing super-intelligent thermostats, Zen has created a simplified version that “doesn’t think it’s smarter than you.” The startup hopes that a more affordable product will attract less tech-savvy customers. 

September already brought another similar announcement. Apparently recognizing the enormous number of connected home startups using crowdfunding platforms to fund their ventures, Icontrol Networks and Indiegogo have teamed up to encourage more activity. Icontrol, a company with its own home monitoring platform, is allowing any smart-home technology provider access to its incubator program if it uses Indiegogo’s service. The Zen thermostat has already been added to the incubator. 

GTM Research projects the U.S. home energy management market will be worth more than $4 billion by 2017. Although many of these recent announcements go beyond simple energy controls, they illustrate the frenzy of activity already underway in the space.

Photo Credit: Smart Home Investments/shutterstock

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